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tv   Capitol Hill Hearings  CSPAN  November 16, 2011 8:00pm-1:00am EST

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person who checks them on the list. they still have to let them vote. that's how open the votes are. that's the kind of thing you have promoted, the kind of thing i'll yield to if you've got a defense for opening up the integrity in the united states. many of these are state laws. i recognize. we have the help america vote act to open it up anymore. i think the gentleman from new york who spoke within the last half-hour, i do agree there should be a paper trail so we can audit the votes that are cast. now we've agreed on that we worked together on that cause. not arrived at that as far as a conclusion for this congress is concerned but i think there should be a paper trail and the gentleman from new york and i are in conceptual agreement on that, mr. holt. and i appreciate that push. i do think it's out of the right spirit of his head and his heart but it might also be
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from suspicion that the people who produce the electronic voting machines may be republicans, they may be democrats, and that seems to color our judgment. mine is, don't give anybody a chance to cheat, and don't let the electronic voting machines be offered in such a way that some programmer can jigger the machine to give an advantage to either party. i think of the election situation that took place in florida in the year 2000. i spent 37 days focusing on that. . it was my job to see that iowa didn't become florida. i chased through all the way through the internet, everything i could find, all the research i could come up with on the process. and after that, i followed through on legislation that passed through the iowa senate. and i discovered a significant
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amount of election fraud in this country. this is in the year 2000, well before we had the american public had heard of acorn. i found a significant amount of election fraud. there are a pair of brothers in florida that did election research. and they have written a book on this and did a video on it as i recall, and part of that video is walking into the maintenance shop where they took care of the machines that took care of the notorious punch card ballots that were trouble in florida in the year 2000 and have the video of the former election commissioner who had retired from that and handed over to his successor and gone to work maintaining the vote-counting machines. the machines that you would feed in a stack of punch-card ballots and the machine would read it and spit the number out on the
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other side. on on that video and it was available at the time, the man walked through his shop and pulled out of his shop a gear and said here is how we do this, grind one tooth off of this gear and every time 10 ballots goes through, we kick one on our side. they got nervous afterwards and tried to suppress it, those kind of things have gone on in america, they have gone on in florida and other states. and the people that advocate for or defend more open election laws and process are whether they realize it or not, enabling election fraud in this country. i want it to be as clean as ssib. i don't want a single qualified vote to be canceled out by a qualified vote. i don't want buses going across state lines loaded with people who are in there to do same-day
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registration. we had voters in iowa who registered from the hotel room. people don't live in hotels in these kind of neighborhoods. it may happen in the inner city and doesn't happen in the neighborhoods i'm talking about in iowa. these are people that come and stay a couple of days and gone again. these are folks that have a home of their own and isn't a ress dens. when you register to vote from a hotel, pretty sure if that's the hotel where they put their campaign workers it's a pretty good bet that those votes are votes from people who are not eligible to vote in that present sink or within the state. i have advocated -- let's see, here's another -- statement made
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by the gentleman from texas if you have no texas driver's license you have to get someone to take you to the poll. don't they have an opportunity for an absentee ballot? do they ever go to town, for example? and can't they time their trip to the grocery store on election day and vote? and the concern about the primary part of this, i think there are some fraudulent primaries that take place and i would like to see them revisit. i would like to see the granite state revisit their primary process that lets people go to the polls and vote, democrats go to the polls and vote in the republican primary. we in iowa have a caucus system and we require they be registered as democrats or republicans and don't get to switch sides that easily, although it is possible in the state of iowa. here's what needs to happen in this country. we need to have voter
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registration lists that are free of duplicates and free of felons where the law applies and need to be certified to be citizens, not a motor-voter law, people who don't speak english who get their dreier's license and ask them a question. if they don't understand a question, they don't understand they are under penalty of perjury and claim to be a citizen and they are not. and they get the nod and registered to vote and an illegal is in a position to cast a ballot. 537 votes have been the difference in the state of florida on would be the president of the united states and leader of the free world decided by 537 votes in the state of florida. every time they recounted, i think republicans on this side and democrats on this side will
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agree that it came back to that same number and if you have some other narrative, you can tell me, but the consensus now after all the analysis is, we got a legitimate vote there. george bush was not the appointed president but elected president, but very, very close in the year 2000 and did pivot on florida, but how far apart would that election have been if one could actually know which of the votes were fraudulent and which were not? last time i came to the floor, i heard the whip or the minority whip come to the floor and make the statement that we didn't have evidence again, as we heard from the gentleman from texas, no evidence that fraud is occurring. and the gentleman from maryland's statement was close to that, but not exact. i would argue the opposite. acorn admitted to more than 400,000 fraudulent voter
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registration, more than 400,000 confessed-to fraudulent registrations. this is the acorn i carry it in my pocket and remipeds me if we let organizations like acorn who seek to diminish the integrity of the vote take over. if they do that, they erode the faith of the american people. as long as we believe they are legitimate, american people are going to accept their results because we have great faith in this constitutional republic which is guaranteed in article 4, section 4 of the constitution, but this country respects the election process and that's why we accept the results of the election process and if we lose faith in it in the election process, legitimate or not, then the very bedrock that the foundation of our coubt country, sets on, crumbles and the constitution crumbles
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because we will have lost our election process. it is too much to ask if someone goes to the polls they would bring with them a picture i.d. i wonder if they have ever gotten on an airplane or rent a movie and asked for an identification to support their credit card when they rent a movie. i never heard anyone come to this congress and say i demand my civil liberties and demand to rent a movie without identification or credit card. why can't we do it on my word and sign it on my word, joe blow and i live at 100 exotic avenue and i want to rent an exotic movie. they know they don't have a civil right to do business in this country without identification. if the merchant requires that
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identification, they willingly supply it. and yet, to choose the next leader in the free world, the commander in chief, the president of the united states, the advocates that have stood on the floor have said to the effect of anybody that walks up there and attests they are a living, breathing human being and live somewhere, they can vote and they can register on the spot and can vote and walk away not showing any identification whatsoever. and in some cases it takes someone to attest that they are the individual that they say they are. they don't need to misrepresent themselves and say i'm joe blow and i live in this presink. sometimes they can lie about where they live and walk to the next precinct and say i'm joe end blow at the next precinct and p. q. r. and put a middle
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name in their name and we don't have the integrity in our election process that we need. i know it's being gamed. i know we aren't getting the prosecutions and convictions because we don't have the structure in place to get the convictions because we have eroded to the point where there isn't a basis to bring that kind of a prosecution. and watched george soros invest into multiple campaigns and those were in swing states. and what happened? we know what happened. those real close elections at the last minute, votes showed up that were surprises and the election turned. we have one senator down the aisle in my neighborhood that arrived in that fashion, mr. speaker. and so i am disturbed about the results of these elections if they do not reflect the actual
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will of the american people, the actual will of the people within the jurisdiction that should be voting for those candidates and i believe we need to enhance the integrity of the ballot. i would shorten the terms that a person could be asking for an absentee ballot and tighten the conditions so that if it's reasonable for you to vote in person on election day, do so. these elections should not be a drawn-out 45 or 90-day absentee ballot affair. the more we cast our ballots from afar, the more we are voting for a candidate that passed away during a campaign and the less likely we need to know to make a reasoned judgment about that candidate. in fact we have elected a senator who have passed away in a tragic plane accident and i regret that that happened, but the people went to the polls and
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voted to elect that person who was past away. i'm for a voter registration system where the law applies to felons, a government-issued picture i.d. that has legitimacy and oppose todd motor-voter and satellite voting and opposed to same-day registration. and all of these components of the election process, there needs to be a paper trail to the ballot. let's have integrity and a certification that they be citizens from the secretaries of each of the states and then if we don't have enough integrity in our ballot, they need to find out how many duplicates there reallyr and there would be many. i have less faith in this than most of the american public does. and if they had the exposure what i had, i would submit there
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wouldn't be the confidence that the american public has and the lack of confidence might result in a different kind of result here within this congress and within the states. i think they would impose more integrity in the ballot process. i didn't come here to speak about that. i listened to the gentlelady and the gentleman who spoke in the previous period and felt i had to express the other view point. and i came here to talk about how we transform this economy here in the united states. and being from iowa, i have listened to the economic proposals of each of the presidential candidates. i have listened to them make their pitch for their vision of america. and i said last january, february, and march and throughout the summer and clear into august at least, that we don't have a presidential
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candidate on the republican side of the aisle who has put together an economic recovery plan. yes they have components and tweak it around the edges and one piece or another is what it takes to bring our economy back where it be longs. i watched this economy deinvolve downward and it is in a deep trough and the length of this trough that we are in and it is an economic fact if you look at the patterns of economic growth and decline throughout the history of the free market world, one will see that whenever there has been a keynesian economic theory flide, the more vigor, the longer the trough for recover. if one looks at the grandest experiment of keynesian, franklin roosevelt's new deal that he unleashed on the
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american people starting at the beginning of his term, the stock market crashed in 1929 and herbert hoover caught up in the throes in that thrift that was a global trend and herbert hoover believed he could steer government to solve the problem. he tried to steer government and went the other way on him. coolidge had a handle on it earlier in the previous decade and that -- let's see how did that go, don't just stand there, do nothing. and because the free market system will recover itself. . we had then the new deal that flowed out of franklin roosevelt, we had billions of dollars that ultimately were spent throughout that period of time, at least in today's dollars, and the c.c.c. camp,
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the w.p.a. programs, the t.v.a., the list went object and on and on that came out of roosevelt. throw some more money at it, borrow some money, grow the federal government and put money into the hands of people and if you do that, the theory was, according to cains -- keynes, his curse linkers on us today, that if would you.net money onto the hands of people, they would spend it and the economy would recover. in other words, we could spend ourselves into prosperity, according to john keynes. now, frankly roosevelt bought into the keynesian economic theory with more vigor than george w. bush bought into the henry paulson stimulus plan or should i say the tarp plan, $700 billion tossed in there to pick up toxic debt, was the plan. but back in the 1930's it was f.d.r.'s plan to follow keynes' directive which was, put money
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into the hands of people and get them to spend it and you'll stimulate the economy. because they believed that our economy was consumer-driven. well, mr. speaker, every keynesian experiment that i know of in history, and that includes roosevelt's new deal, it includes the japanese, and it absolutely includes barack obama's economic stimulus plans, his approach to this, by the way, the president, president obama, has told us directly face to face that he believes that roosevelt lost his nerve, that he should have spent a lot more money in the 1930's, that because he lost his nerve and didn't spend more, it brought about a recession, brought about a recession within a depression and unemployment went up because roosevelt didn't borrow and spend enough government money. well, i know what it's like to compete with a government that has more money than the private sector has. i know what it's like to try to hire somebody off of unemployment, i know what it's
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like to train employees, put them on a benefits plan and have them finally in a place where they can be a full time employee that can yield a return on the work that they're doing and you can count on them being to work every day and look at how their career is laid out working for your company, and have the federal government or the state government or the county government or even the city government come in and outbid you for those services. a how do they do that? they do that by looking around and thinking, here's this trained employee, what does it take to get them? and they'll up the, a n -- ante until they can hire this trained employee and inevitably that employee will take the offer of the higher paycheck and a benefits package that competes or exceeds the one that you can offer from the private sector, and go to work for the government. well, they don't have the responsibility, where they don't have to work as hard, where the hours are more predictable, where the risk of employment is less and it's more stable. i recognize that. better wages and better benefits
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and all of those comforts that come with a government job work against the private sector and so private sector employers then find themselves faced with having to go out and hire more help and train more help and see that those employees roll over into the government employment. here's the downside, where does the government come up with the money to pay more wages and better benefits which they have been increasingly doing over the last generation? by raising taxes. the government raises taxes to get the revenue to bid against the private sector. and then the government comes out and makes an offer that says, we're going to extend unemployment benefits up to 99 weeks, now it makes it harder for the private sector to recover because once they're competing with the government's offer, the government's offer to hire employees away or the government's offer to pay people not to work. and where does that money come from? this federal government borrows it. this federal government borrows it from the chinese, from the
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saudis, borrows it from multiple countries around the world and about 50% of it, to be fair, comes from investors within the united states domestic funds that are invested into u.s. treasury bills. for example, -- so a government that believes that it can stimulate the economy by stimulating consumption and completely ignores the part of the equation that requires that there be production and for the economy to function and i would point out that if no one is producing any food, clothing or shelter, if no one is producing any transportation links out there in the private sector, if no one is making available any of the recreation alpha silts that will attract those dollars, there's no not production. if there's not production there's no place for anyone to spend their money. this economy is production-driven, not consumption-driven and we must, to grow out of this economic situation that we're in, we must
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produce goods and services that have a marketable value, both domestically and abroad. when we do that, and we will eventually do that, this country will grow out of this problem that we are in. but we must get government off of our back, we must keep a competitive tax rate for the rest of the world, we must reduce our regulation, we must stimulate our entrepreneurs and this republican side of the aisle has now for about three years been saying, where are the jobs? mr. president, where are the jobs? well, i've heard that echo many times in this chamber and across through the media outlets in the country. but i would submit that there's something else out there that's required before there will be any jobs and that's the prospect of profit. investors, employers, entrepreneurs must have a prospect for profit before they will invest their money or put their time in or take the risk of hiring employees. especially with ever-more
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regulations, especially with obamacare pooring down over everything we do -- pouring down over everything we do, we're not going to get to a recovery until investors, entrepreneurs and employers can see an opportunity for profit and begin to realize that profit because you can't write paychecks for employees from a deficit spending very long, you must have profit in order to pay employees. so if there's going to be jobsers and we want americans to go to work, you must have profit in order to fund the wages. and i don't know why i don't hear that from anybody else. it's as if this word profit is a dirty word. no it's a very good thing. america is a country that has to build on profit, on free enterprise capitalism. i just took a look at my desk drawer today. there are flash cards in there that were published in 2008. these are the flash cards that enable one to be trained for naturalization here in the united states. so if you want to become an american citizen, and you come
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to america legally, get yourself a grean card, and what -- green card, and what you do is you have to t.s.a. take a test. what's part that have test? what's the economic system? free enterprise capitalism. that's a little heads up, mr. president. i hope you can pass that test. mr. speaker, i appreciate your attention and i yield back the balance of my time. the speaker pro tempore: the gentleman yields back. under the speaker's announced policy of january 5, 2011, the chair recognizes the gentleman from oregon, mr. blumenauer, for 30 minutes. mr. blumenauer: thank you, mr. speaker. i appreciate the opportunity to be here this evening, sharing some observations. it is of course always interesting to have shared the floor with my good friend from iowa, listening to his view of the university -- universe. and even wincing a little bit as i hear him talk about the vilified public employee, where they don't have to work as hard and they get lots more money
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than the private sector. it's interesting that most independent studies suggest that for many categories of public employees, they are not above the market and it's sort of a fantasyland, i think, to have this disdain that was overwhelmingly rejected in ohio, when voters had a chance to put a stamp of approval on the fairly radical agenda of governor casic, our former colleague here on the floor -- in the house of representatives. things, by the way, that casic and his fellow traveler, governor walker in wisconsin, didn't talk about during the election. but turning their guns on public employees, voters in ohio had a chance to give their verdict and it's interesting that they overwhelmingly repudiated this notion, the lack of value of
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public employees, the fact that they're slackers, lag ards, and that what they do is not worthy of public support. it wasn't the public health nurse, the firefighter, the teacher, the marine, the person in navy that almost wrecked the economy. many of these people are providing essential services, they are extraordinarily hardworking and i'm happy to invite my friend from iowa to come meet some very hardworking public employees in iowa and in portland, oregon. i think those generalizations are really unfortunate. it's feeding what we see in terms of the back and forth now, it's actually why there are people who have been motivated by the occupy wall street movement. but i'm here tonight to deal with one very specific focus that i think needs some more
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attention and that has to do with the postal service. you know, this is one of the areas today where people are zeroing in, you will hear some talk of folks that would feel much better if we just privatized the postal service. get out of the business, let the private sector provide this service to american households and commerce, and that we'll all be better off. i think it's important to -- for to us take a step back and look at some of the facts and look at some of the consequences. you know, the united states postal service has a long and storied career. it's the second oldest federal agency. in fact, the predecessor was actually created by the continental congress and ben franklin was the post master there, just as he was america's
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first postal -- postmaster. the postal service is one of those activities that maybe some of my colleagues on the floor kind of overlooked when they had this great ceremony of reading the constitution early in the session. and then proceed to act as though they really aren't paying attention to the constitution. the article 1, section 8, deriving -- explaining the congress' powers, one of them is specifically to establish post offices and post roads. this was one of the unique institutions that helped bring america together. and it is still bringing america together today. it is in fact a vast and sprawling enterprise. it employees -- employs more people than the entire auto industry in the united states,
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what we used to call the big three, it's the second largest nonmilitary employer in this country. it has more installations than wal-mart, starbucks, and mcdonald's put together. even though a number of them have been closed over the years. there's a reason that we've made this investment for 235 years. there's a reason that there are hundreds of thousands of dedicated employees. there is a reason why we have the broad sweep and that is this critical element of holding our country together. it is a backbone of commerce. we talk today about the economy of the future, ecommerce is a large and growing area. it relies upon the postal service for much of its
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efficiency. and i'll talk a little bit about that later. but it's also a tremendous resource for the american public . i can drop in the mail here in washington, d.c., if -- before i get back to my home in portland, i can drop my tax payment in the mail, 44 cents, with great confidence that that's going to arrive in a timely fashion in my -- and my bill will be paid. i think, this is -- it is, i think, interesting to look at the large national direct mail marketing industry that involves advertising and shipping worth billions of dollars a year and again very important to a large number of americans. . if my colleagues just turn the postal service over to provide this activity to the
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american public like u.p.s. and fed ex, they actually rely on the postal service for that last connection. there is actually an important partnership between these carriers and the postal service. now there is no doubt that if we completely privatize, turned it over, got out of the way, there would be some people who would benefit, people who live in very large cities, people who are big businesses that can negotiate certain types of services may actually see a little bit of rate reduction and might be able to get it for their needs. for them, the free market may provide a modest benefit -- maybe. but the more important question is what would happen to the rest of america, the other 99%, particularly rural and
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small-town america. does anybody think that you would be able to send a letter from the florida keys to nome, quea for 44 cents if government wasn't there providing that government service? i don't think so. we would also lose the personal touch that is so cherished by so many. we are hearing the outcries now. i hear it in oregon, where there are dozens of communities that are being considered to lose their postal service. every rural and small-town american community will feel that bite. higher costs, less service, loss of jobs, loss of community identity, loss of connectivity. i would urge some of my colleagues to take the time to
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listen to rural post masters and letter carriers about the role that they play in these far-flung parts of america. they are an important part of the local economy. it is a place where community members gather. there are opportunities for them to be in touch with loved ones and to be in touch via the magic of ecommerce. they have far more choices and opportunities. well, as we -- before we jettison that element, it is important to consider how important that is to our national infrastructure. and that's what it is. it's not just the largest source of nonmilitary family-waged jobs in america.
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i don't think wal-mart is necessarily the criterion that most people want for family-wage jobs for health care and retirement benefits. you know, there was a time -- and that's what most people in the middle class, if not took for granted, at least aspired to and most of us growing up in post-world war ii america saw that, those who are willing to work hard and be able to follow through, they had. well, more and more, the norm is that is unusual. i hope we don't reach the point where we lower the standard. but 2/3 of a million family-wage jobs, with descent security and benefits, people who are providing an essential service, is important.
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but it's the infrastructure that ties america together that i think is even more important. now, there are many things that are involved with the postal service that are hidden away that people simply continue pay any attention to. in part, i guess i would just reference the exemplary service that is provided by most postal employees. in fact, it is -- i know a number of postal employees who are highly regarded by the people on their route. they are recognizedor their birthday and get christmas birthdays and people look forward to them and rely on this service and appreciate it. postal employees are involved with a wide range of activities in terms of hell ming people with their -- pell pping people with their tax return and
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checking on house-bound friends and neighbors when something is amiss. it is a postal employee who understands it first. i think it is important that we take a deep breath and look at the service that is provided and look at what difference it is for america and look at it as an example of where we are going as a country. one of the items that should be acknowledged is that this is the so-called crisis that we are facing, much like the summer's debt ceiling crisis. it's manufactured. the same way that we were always going to pay the debts that the united states had always already incurred, but some people are raising doubts. they created a political firestorm and encouraged the downgrade in the eyes of some in one rating agency in united
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states debt but we were going to pay our bills but possible to manufacture a crisis. well, the post office is facing a continue age of the theme that has plagued its existence ever since washington decided to trap the united states postal service between being a business and government control. business demands, government control. back, mr. speaker, when the postal service ceased being a formal government agency, there were certain conditions that were negotiated, because for years, the post office was a government agency. the benefit, the public benefit that was recognized was taken into account. there's no question that the
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post office provided subsidized mail service from -- some people remember the three-cent stamp. some people remember the postal service help launch the aviation agency in this country. when air mail service began between new york city and washington, d.c. the post office was part of that infrastructure. the post office helped with the development of the transcontinental railroad service that helped cities large and small. well, in 1970, the post office -- the postal re-organization act changed the post office from being a department of the federal government to being an independent agency.
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it created a board of governors. it authorized the postal service to borrow from the public and phased out the government appropriation for operations. and by 1982, that public benefit, that national connection was entirely eliminated. there are also other items that were involved with that negotiation. at the time, there were hundreds of thousands of employees past and current, who were part of a federal employee retirement system and its successor system that followed on in the 1980's. their retirement was the responsibility of the federal government. it had been the responsibility of the federal government for over 180 years. there were negotiations at that time about how much the postal
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service would have to pick up versus -- in terms of that liability, even though it was a long-standing responsibility of the federal government and the way the post office operated. there was a very significant payment that the new post office paid into the old retirement systems by virtue of employees who were federal employees. well, you could make the argument that if you want to completely privatize it and cut it loose, but that was a long-standing federal obligation. a deal was cut. a number was picked. and it was, i think, arguably, a pretty generous deal on the part of the federal government, on the part of congress, in terms of what they were forcing the post office to pay.
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it's not unlike what has happened more recently when the post office has been required, unlike other businesses or government agencies to prefund health payments for future employees, tens of billions of dollars have been extracted from the postal service and current operations to deal with something that's going to be far in the future, something, again, as i say, the federal government doesn't do, private employers don't do. you can argue about how everybody would be better off if that happened, but it's an example of creating an artificial crisis and these tens of billions of dollars that were extracted in the early deal or tens of billions of dollars that are now flougr flowing because of the 2006 act have
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destabilized the postal service at a time -- i mean it's clear that the postal office itself is stressed. revenues have dropped for a variety of reasons. in part, there is ecommerce and a number of things that we routinely emailed that we would have mailed even a couple of years ago. and of course, with the bubble bursting in the economy, near meltdown, we have seen economic activity decline. so the post office has faced $20 billion in lost revenue over the last four years and it's something that, in fact, needs to be addressed. but we ought to understand what the dynamic is, that by forcing the post office to prefund its
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future health care benefits for the next 75 years in an astonishing 10-year time frame was something that was calculated to stress the postal service even if the economy hadn't collapsed. you know, without the provisions of that 2006 legislation, the postal service would be operating at a surplus even with the challenges today. well, there are interesting pieces of legislation that are floating around. i must confess a little partial to looking at some of the proposals that are coming forward that would help take the post office off life support allowing us to address these larger issues.
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now, there are certain variations that congress could have dealt with in the past, policy questions. should it cost the same to mail a letter from here to the white house as it does from key west to nome, kea. do we have vearkt in question? there may be some arguments for doing that. but but for the congress over the years has hamstrung the post office, arguing that it should not have public support and operate like a business and then turning around and denying the postal service the flexibility that private business has in terms of upsetting rates, differential rates. in terms of moving into certain product lines.
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in an enterprise that we value that has this vast infrastructure that is in place hundreds of thousands of dedicated employees, over 30,000 locations, a tradition of service and connectivity to americans six days a week, we would think that maybe given a little opportunity to be creative. well, what we have found is that there is available interest in allowing them to actually operate like a business. . i do hope that my colleagues, as they look at the reform proposals coming forward, and look at whether we're going to give them some flexibility to use the resources they already have and not penalize them with draconian and unrealistic requirements, take a look at what these proposals will have
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on rural and small town america. you know, not everybody has access to high speed internet, that make email and meeting your -- reading your favorite magazine online very difficult. there are two million americans that still lack access to broadband services with over 3/4 of those people living in rural areas. i mentioned that in my state of oregon there are over 40 post offices that are listed for possible closure. people should think about those impacts, if you live -- over half them -- of the people in these communities are located more than 10 -- more than 10 miles from the next nearest post office. some are as far as 33 miles away. what are the impacts of having
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customers drive an hour round trip to visit the nearest post office? is that reasonable? you know, it's a little frustrating for me that as we have looked at some of these impacts, the attention that is paid to rural small town america has not been, i think, given its due. one of the areas is the proposal of eliminating six-day service. let's consider how important saturday mail delivery is for communication and marketing. utilized by millions of citizens and mailings across the country. again, especially in rural areas. there are millions of americans now who are using the post service to deliver prescription medications, a service that relies on moving the mail six days a week, not lying dormant
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in mail processing facilities for two, three days or depending on how holidays will fall, maybe longer. it will have megtive impacts in -- negative impacts in terms of being able to -- for people to be able to sign for packages if they're not home over the weekend. think about these details. think about what's going to happen if you eliminate saturday delivery for the post office, customers are likely to see private carriers charge much higher surcharges to have them deliver that option or go long distances to pick up their mail after renting out private post office box for that purpose. saturday service distinguishes
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the product line that we allow the postal service to have and i think further diminishes their ability to be more self-supporting. and, of course, eliminating the six-day service is going to eliminate 80,000 middle class jobs. there's -- and they do so with some real question about how much of the saving is actually going toe cur. -- to occur. the postal regulatory commission was set up as part of this megism in -- mechanism to establish an independent post office. they do some outstanding work, there's some really bright people, and the regulatory commission found that the postal service has miscalculated the potential savings by about $1.4
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billion a year when they talk about eliminating six-day service. they found that the postal service additionally failed to account for nearly half a billion in lost revenue that would come from cutting back saturday service. and as the president of hallucinate mark noted in a congressional hearing last year, such reductions in service could lead to a death spiral where service reductions and the declining consumer base are self-re-enforcing. the postal commission found that eliminating one day of mail service would cause 25% of all first class and priority mail to be delayed, often by two days. this has serious consequences that ought to be, i think, examined carefully before we move forward in this direction. this is not to suggest, mr. speaker, that the post office should be immune, like any
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business or government agency we all in these difficult times, in changing circumstances, need to consider new ways of doing business. and my conversations with people in the postal service, with the men and women who work there, postal supervisors, letter carriers, clerks, the postmasters, they all have ideas. they all are interested in being part of a solution and i hope that congress approaches this in the same fashion. last but not least, part of this infrastructure that ties us together needs to be looked at in a broad context. we've all been deeply concerned about national security in the aftermath of 9/11. the anthrax situation we've had here, potential pandemics that -- where there are health crises. how are we going to deal with people quickly in times of need,
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to get them information? to check on people? to distribute potential medicines? you know, the postal service, with 2/3 of a million employees, a nationwide network of over 0 facilities, people who have equipment, who have no-how, knowledge of the community, the same way they help people with the right tax forms for immigration -- or immigration could also be a resource in time of natural disaster, epidemic or terrorism. let's think big, let's think fairly, let's not have an artificial crisis, let's deal meaningfully with this critical resource that america has developed over the last 235 years, not scapegoat the employees, not scapegoat the management, and have congress be able to have it both ways saying, treat it like a business, but not giving them the flexibility. i think it's time to take a deep breath, look at the resource and
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what it means for america, particularly rural and small towns. thank you, mr. speaker, for the opportunity to share some observations on this important topic. the speaker pro tempore: the gentleman yields back the balance of his time. under the speaker's announced policy of january 5, 2011, the chair recognizes the gentleman from texas, mr. gohmert, for 30 minutes. mr. gohmert: thank you, mr. speaker.
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we're living in interesting times, as i understand it, that's a bit of a chinese curse, may you live in interesting times. well, we're here. not exactly as perhaps the founders would have hoped, where we would have an executive branch that just declares that without consulting congress he's going to commit american military to an action without knowing really who he's helping in libya, without knowing exactly what's going to happen once we finish helping them and without knowing just how much we're going to suffer and just how much our closest allies like israel are going to suffer after this president unilaterally,
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without consulting congress, commits our most valuable assets, american lives, not to mention the treasure, ant american equipment. for those -- and the american equipment. for those who have ears and those who have eyes, they understand that when the president says, oh, but we're not to worry, eventually we'll turn it over to nato, and then has a grandiose announcement, we're turning it over to nato, that actually the united states military is 65% of nato's military. because there's supposed to be a regular order to things and in fact republicans ran last year saying, we're going to get back to regular order. now, one of the things we went through for the preceding four years with the democratic majority and speaker pelosi in
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charge was the democratic majority came to the house floor over and over with bills that had not gone through committee process. and then they were brought to the floor with no opportunity to make any amendments whatsoever. well, one of the things we have done this year, we've had lots of amendments. we've had an incredibly open process on the floor compared to what had happened the preceding four years. when there were more closed rules than there had ever been in the history of the country. meaning no input, basically shutting out the almost half of america that republicans represented. it was our way and no highway. that's not the way regular order
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was supposed to go. and we were assured by our own leadership, of course, that once we had the majority it was back to regular order. and then over and over big things had to be dealt with, not that they couldn't have been foreseen. it could be reasonably foreseen that a continuing resolution was going to have to occur and lo and behold it came upon us in the spring as if it had never been contemplated and we were told there's no time for regular order on these things, we just got to do it, can't have amendments, can't cut off funding for obamacare, even though we cut off funding for some other things that would otherwise be considered legislating, but because it was
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part of the bill as it came from -- directly from committee,, it's ok, so the rules committee waived any point of order objections. now, that's inside baseball, but the bottom line is even though we've done a better job of allowing amendments here op the floor, we -- on the floor, we still haven't gotten back to regular order. we've gone from one crisis to another crisis and have had to tell america, gee, this is another crisis, so we don't have time to go through regular order. as i understand it, tomorrow most likely, possibly friday, we're going to have a balanced budget amendment brought to the floor. it was part of the debt ceiling agreement that was negotiated
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end of july, end of the summer session, before the august recess. we were going to have a vote on a balanced budget amendment. but there was no specification as to what balanced budget amendment it would be. well, along the lines of the so-called regular order, we have had a balanced budget amendment, we've had hearings on it, we've had -- it marked up out of subcommittee, committee, came to the floor, judiciary committee, we had a long, protracted markup. in other words, markup is simply the hearing where anybody can bring any amendment and we have debate, full debate, and anybody on the committee who has any amendment they want to bring to that bill, they can bring it to the bill. that's regular order. we had that in committee.
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on the balanced budget amendment . and our good friend from virginia who has been such a long suffering valiant warrior for a balanced budget amendment, it was his bill. house joint resolution 1. and i had an amendment to that resolution that actually changed the cap on spending from 20% of gross domestic product to a cap of 18% of the gross domestic product and that amendment passed. that's regular order. that's how you do it. some of us had amendments that didn't get passed. but we still had the chance to bring them, to have our chance to speak on them, debate on them, have every other member on the committee who wished to speak on every amendment be heard. those things make for a long,
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drawn out hear -- for long, drawn out hearings, and that's what we had. that's called regular order. that's because everybody who is involved can have input. and that's what we had. and aft protracted process, we voted out of committee, affirmatively voting out of committee with the majority of those out of the committee voting for the ultimate product after that long, arduous debate voting process, we voted out of committee a balanced budget amendment. now, i'm given to understand the rules committee has taken up a different balanced budget amendment and we are told we didn't need to go through regular order for that. we are bringing a balanced
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budget amendment that did not come out of committee, that was not voted out of committee, and gee, whiz, it reminds me a great deal of the outlandish hearings that the energy and commerce committee had when they came forth with a 1,000-paged health care bill in the last congress. and there was a lot of strong handedness that brought that bill out of committee and it was clear from the polls that that was not what america wanted. but then by the time the speaker, speaker pelosi, and leader reid down the hall, president obama, had their say, that thousand-page bill that was voted out of committee, turned into ultimately a 2,000-page bill.
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that came to the floor, not under regular order, it just appeared. nobody knew who had written it but when we took the majority, we were going to do better. see who was pushing what amendment, see what got voted out of committee and have some confidence that that would be what would come to the floor. this week, we're going to take up a balanced budget amendment, didn't come out of committee. we're told we got to vote for it because it's another crisis. we got to. we got to. it doesn't have a spending cap on it. not even the 20% of g.d.p. amended down to 18%, none of
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that regular order would mean that we bring something to the floor that was voted out of committee. at some point, we have got to get back to regular order, which was promised to the merp people if they would put us back in charge. and it's good politically. for both parties. because each side gets to show in committee and here on the floor what amendments their pushing for, so by the time a law gets passed, it's been fully debated and talked about. that was one of the problems with the last majority. they were shoving bills down our throats, down america's throats, without any real debate.
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that's how you could get a comment from the speaker like gee, we got to pass the bill to find out what's in it. came to the floor with a full and open debate. no, we just bypassed that. one of the things that hurt this is country and this congress is we haven't gotten back to regular order like we were supposed to. we've done a lot better a whole lot better because of the amendment debate, but we haven't gotten back to regular order. so we're going to bring a balanced budget amendment to the floor that's different from the one that was fully debated, full opportunity for amendment and committee, but we're not going to have that opportunity on the floor. no, sir. not going to have it. we're told we can't have a spending cap in the one we're going to have on the floor.
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why? not because the committee voted it down. they didn't. not because the body voted not to have it here in congress. but because we're told that what came out of committee cannot be what comes to the floor. i recall people previously saying that regular order makes for better law. and allows the house to work its will. well, how is it that we're not going to be taking up the balanced budget amendment that came out of committee. that's regular order. that's the house working its will. what staff member decided we weren't going to get to have a
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spending cap that we could debate and vote on? we know that staff members had a lot to do with obamacare or the president's health care bill, because there's provision in there that exempted the speaker's staff from having to be under obamacare when all the rest of us were going to be under it, including members. so you kind of figure you must have staff writing that one. what staff member decided that we couldn't bring to the floor the balanced budget amendment that came through regular order out of committee. because that balanced budget amendment fully debated, fully -- opportunity to amend in committee, the regular order means we'd have that same opportunity with the whole body here. who was it? a staff member? who was it that just decided we can't do what the body decided was the will of the committee
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and the will of the house. who intervened? i really don't know. but the right thing to do would be to bring the balanced budget amendment with the spending cap. there were all kinds of amendments, addressing the spending cap. some folks didn't want it, they lost. there was the provision for a supermajority to raise taxes on that bill that was voted out of committee. well, that's not in the balanced budget amendment. why? i don't know why. we're bringing -- told we're bringing to the floor a balanced budget amendment that appeared and we didn't have anything to do with bringing it out of committee. but we're told we have to pass this one because it's the only one that has a chance to pass even though the senate says they're going to bring it down.
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even though we've got democratic leadership saying they're going to bring it down. well, if people on the other side of the aisle in the house and the majority in the senate say they're going to bring it down, then why are we bringing to the floor a balanced budget amendment that a majority voted for and debated and amended and voted down amendments. and passed it out to come to the floor in that order. how is it that we're trying once again in the house as a majority to strive to pass a bill to hit a mark that we think maybe there might be some chance that the senate may pass as well? when we're told that, you know,
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that it's not everything we believe in, but we're not going to get everything we believe in because we've got to try to do something the senate will do. well, if we'd been told repeatedly that the democrats are not going to assist, that the senate is going to vote it down, then why not bring to this floor what we believe in our hearts as a majority ought to be passed? it's going to make it real confusing a year from now in november for voters. when republican jote in the house is going to have to go back as the founders envisioned and face our constituents. and even though we were in the majority, we didn't bring to the floor the things that we believed in. we brought to the floor things we were hoping maybe the nat would agree to go along with.
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we're bringing to the floor what's called a mini bus that's going to have some appropriations on it, but actually it went through the conference process, yet the underlying bill that passed out of the house was not a bill that a majority in the house really thought would be the best, it was a bill that we thought maybe the senate would pass. so we compromised with ourselves and the majority in the house thinking we'd compromise with ourselves in the house, that maybe the senate would vote through just what we passed but no, they didn't. they compromised with us further after we compromised with ourselves trying to hit the mark that we thought they would pass. so it goes to conference committee and we're further required to compromise with ourselves, what was the sense
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of that? now we have to vote on a bill, an appropriations bill, where we didn't even start out hitting the mark we thought was best but rather hitting the mark that we thought gee, maybe the senate would pass? it's going to be confusing to voters. we're going to say, here are the things we believe in, next year, in november, and they're going to say, why didn't you pass that? and apparently, the response is supposed to be, well, because we were trying to pass something we thought the senate would pass. and the voters are going to respond, but what about the principle? you told us in november of 2010 you were going to stand on? and unless we get back to the regular order in this body, we're going to be in trouble.
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because we need to be able to show voters in america we passed in the house what we believed with all our hearts was best for america. we are going to cut spending. so we cut spending. we cut over $4 trillion over 10 years. we ought to be able to tell the american public that. but instead, we have to tell them, well, now, we were trying to hit a mark that wasn't too high because we were hoping the senate would just pass it without the need for a conference. that's why it will be confusing to voters. i know you're saying you believed in those thicks but that's not what you passed. it's time to start passing what we as the majority in the house believe is right. and force the senate to pass what they think is right.
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the big giveaway spending bills. force them to pass those. don't come down here and compromise with ourselves and have a spending bill that we think, even though it spends more than we think is appropriate, we think, gee, maybe the senate will go along, because that looks to the american public like we're just like the democratic controlled senate. but if we stand firm on principle in this body and say, here's what we believe in, here's what went through regular order, here's what was passed out of judiciary committee, here's the balanced budget amendment and we took it to the floor and we have wide open amendments, wide open debates, the american public could see this body at work and we passed what we believed was right for america. and then forced the senate to pass what they believe is right for america. and not continue to give the
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democrat majority who want to spend like crazy in the senate, we keep giving them cover because we won't stand on what we believe and pass that here in the house. that's what we ought to be doing. that balanced budget amendment ought to be the one that came out of the jew kish dishary committee. it ought to have a spending cap. it ought to have a supermajority in order to raise taxes. that was on that bill. there were efforts to strike that part out. there were a rot of amendments. some to strike things like that out, some to put other things in, some to make it weak. but we fought those off successfully in committee and came out of committee with a good, strong, balanced budget amendment. that's what ought to come to the floor. not the weak-kneed one we're going to get. . because a balanced budget amendment looks like a prescription for spiraling
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upward taxes because we have seen even with a conservative majority in the house, it's just tough to cut spending. because we are told we've got to spend to get the senate to go along with these bills. it's time to take the tough stands. america's in trouble. it's in big trouble. and as we fight these battles, it doesn't help to have people jumping on a band wagon that really wasn't the band wagon they showed themselves to really believe in previously. and by that, i'm talking about secretary secretary of defense, he wrote this scathing letter talking about how if the
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sequestration occurs, hundreds of billions are cut from defense , it could mean the loss of -- i believe it was a couple of hundred million of our military. little ironic coming from the current secretary of defense, because the people on this side of the aisle believe in a strong defense. we believe that it is our number one job to provide for the common defense, because if we don't do that, all these other things just go away, and we're overtaken by people who want to bring down our way of life. but if you look to what secretary panetta's was participating in back in the clinton administration, you get a little bit of look at what really was believed at the time. you know, we have had president
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clinton and those touting his time as president, claiming, gee, he is the one president that actually cut the federal work force. no, he didn't. he cut the military. he didn't cut the federal work force, he cut the military. only area that he cut. and we paid a massive price after 9/11, because we had to get back up because we once again found having a strong defense is important. reagan tried to warn us about that. people don't get attacked because they are perceived as being too strong, they get attacked when people perceive them as being weak, and that's how we were perceived. in january of 1993, when now secretary of defense panetta started as a part of the clinton administration, there were
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1,761,000 400 members of the united states military. in july of 1994, secretary panetta started as the chief of staff for president clinton and that continued through january of 1997. so let's take a look from the time secretary panetta started as part of the obama administration, we went from 1,761,481 members of the military to in january of 1997 when he left the clinton administration, 1,457,413 members. that's a 304,068 drop in members of the members of the military while he was part of the clinton administration. seems to fall a little bit on
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deaf ears when you have a secretary crying about cuts to the military when he presided over a far more draconian cut over that same military when he was part of the clinton administration. the problem is, we can't afford massive cuts to our defense, and at the very time they're ok with that, the president goes down to australia and says we are going to commit droops down here, too. the president is committing troops all over the place without any regard to libya or egypt or the outcome of what is being done, what's going to happen at the end. and we are going to pay a severe price. we need to stand for a solid defense. and if we get back to a regular order in this body where things
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are voted out of subcommittee after a full chance to amend, voted out of the full committee with full chance to amend and debate, brought to the floor as they come out of committee, and fully debated and fully amended here on the floor, america will see who stands for what, and it will be easier for the voters in the next election and it will be easier for all of us to tell what it is that the american voters are wanting because they will have a clear view of just exactly what their's getting. -- of what they're getting. i enjoy "liberty and tyranny." it ought to be a textbook and let me finish with this quote from ronald reagan that mark puts in his book. how can limited government and fiscal restraint be equated with lack of compassion for the poor?
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how can a tax break that puts money in the paychecks of working people be seen as an attack on the needy since when do we in america believe that our society is made up of two opposed classes, one rich, one poor and neither able to get ahead at the expense of the other. since when do we in america accept the theory of social and class warfare, since when do we in america endorse the politics of envy and division? it's what the president's preaching right now. it needs to stop and time to provide for the commons defense and get back to regular order in this body and the country will be better off for it. with that, mr. speaker, i yield back. the speaker pro tempore: the gentleman yields back the balance of his time. for what purpose does the gentleman from texas rise? mr. gohmert: move that we do now hereby adjourn.
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the speaker pro tempore: the question is on the motion to adjourn. those in favor say aye. those opposed, no. the ayes have it. the motion is adopted. accordingly the house stands adjourne >> today, a bipartisan coalition from both chambers and urged the doing deficit reduction committee to come up with a strong package agreement before the deadline.
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that is next on c-span. executives of fannie mae and freddie mac testified on capitol hill. they defended paying out executive bonuses. that is coming up shortly. later, house debate on carrying concealed firearms. >> for those who say that we are rushing this issue of civil rights, i say to them, we are 170 two years late. for those who say that this program is an infringement on states' rights i say this, the time has arrived in america for the democratic party to get out of the shadows of state rights and walked into the bright sunshine of human rights.
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>> hubert humphrey spoke those words before -- 20 years before chipping the civil rights bill into law. the two term mayor was vice- president under lyndon johnson and later ran for president. we will look at his influence on american politics this week on "the contenders." live on friday at 8:00 p.m. eastern. next, democratic and republican lawmakers tell members of the joint deficit reduction committee to go big in coming up with a solution for reducing the federal debt. they want the proposal to be a minimum of $4 trillion in deficit savings. this is 20 minutes.
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>> thank you all for coming. thank you all for coming, we have a bipartisan and bicameral group of legislators that has been dubbed the "go big" coalition. we have been urging the super committee to go big. they need to do that if we are going to stabilize the debt. we want to encourage the super committee, although there is a week left, this is not rocket science, they can do this. they can go big in the they can help solve this problem. we want them to know there is a bipartisan group of legislators on both sides of the aisle that want to work on this and want to make the tough votes necessary to get a set of the situation we are in. we are going to have a few speakers.
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>> thank you very much . mike simpson is from idaho. he and i have a relationship, we started a relationship early in his career. not in mine, i had been here some time. [laughter] this is the kind of comment that undermines cooperation in the congress of the united states. [laughter] mike simpson has been a partner along with others. saxby chambliss is my fraternity brother. we are good friends.
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the public does not believe we have good friends across the aisle. that is not accurate. we are here to say we must work across the aisle and both houses to get this country on the right track. last year, mcmullen said that, "our national debt is our biggest national security threat hippo that is why we stand here on this podium -- threat," that is why we stand here on this podium. we must do something to pay down its debt. two weeks ago, a number of us from the house, some 100 democrats and republicans did together to send the message we want the joint select committee to send us a deal that is big. about four dollars trillion in deficit reduction, and is accomplished through a mix of
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reductions in expenditures and revenues. we are returned and joined by senators of parties who share our concern and agree that committee members, for the sake of our country, should recommend a package that cuts revenues and reforms consistent with the gang of six proposal. we have the greatest chance we have seen in a generation to strike a bold agreement that will move us forward on a sustainable fiscal pat and spur economic recovery. to do so, it is not easy. we recognize the pressures committee members are facing. we want them to know there is a large insignificant number of us -- a large and significant
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number of us who want a fair deal. that is why we are standing together today, democrats and republicans united. to send a message of urgency and support. more than 100 of us in the house have already sent a letter to that affect. the of us -- none of us want to risk the effects sequestration will bring if the committee fails. sequestration is not a worthwhile option. at risk is more than just the economic impact but also the trust the american people have in their government to solve the most pressing problems we face as a nation. i want to thank all my colleagues. i want to thank all the house and senate members who have come together to send this message that the seriousness of the debt challenge can only be met with
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an equally serious and bipartisan determination to do what needs to be done, to do what the american people expect us. i will the yield to my friend saxby chambliss. >> thank you. let me just say to my good friend steny hoyer, how much we appreciate your leadership and willingness to step up and show your support along with all our colleagues in the united states senate who have committed to say to the super committee, the right thing to do is to go big. go big maiming 3 trillion, it may mean four, it may mean five. if we do not get to that level of deficit reduction, we are not showing to the world marketplace, to americans, and to people around the world who are watching closely, what is
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happening in the next states congress today and over the next week, that we are serious about this issue. we are not going to send the right message. i am proud to stand here today and say super committee, we have got your back. we support you. we look forward to working with you on whatever course you decide to take to make sure we do the right thing for the american people as well as to show that america leads the financial free-market and we are going to be there to back you, to make sure that the leadership continues. with that, i will turn it over. >> with this many people i will take the podium when i get the opportunity. incredible work has been done. the house working group, through multiple leaderships of democrats and republicans, the gang of six has been able to
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work together, look at us. we have a substantial amount, over 150 members that mean that all be here -- that may not all be here. they have come together to say we want to go big. the time is of the essence. we cannot kick the can down the road. that has been going on for a decade. now is the time. they have the support of these members of congress. it is not about their election, what is on the horizon, it is about the american people. this is about the next generation. we cannot turn our back on the next generation. we must leave this country better than we found it. the way that is going to be done is to working together in a
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bipartisan way. i will turn it over. >> i will be the briefest of everybody. i want to make sure everybody gets a chance. the it cannot be an option. the rest of the -- failure cannot be an option. the rest of the world is watching. what is happening in europe, we cannot have that here. whether we like it or not this debt and deficit debate has become an effective proxy for whether our institutions are up to the job. i think you are seeing behind us a growing bipartisan group in the house and the senate that want to get the job done. >> the world is watching. we know that the economic future of our country and of the world rests on decisions that will be made in the next few days.
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this is a circumstance that requires us to work the other. we know it is tough, we know it has been done. the group of six did it. this group can do it. they need to know if they are bold, brave, if they go big, we will stand with them and the american people will stand with them. >> you have heard the message. there are three critical point. we are here to support the super committee. to make sure they know we have their back and we will come together. note too, the figure -- number two, the figure is not arbitrary. it is what we must do to achieve the fiscal reform that will keep us the greatest
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nation and the greatest economy in the world. those of thefosure super committee and on congress know that we have the ability to develop a bipartisan solution and we are ready to back it. >> good morning. i am a congressman from lincoln, nebraska. the spread of our current impasse, we are here as a nonpartisan group -- despite our current impasse, we are here as a nonpartisan group. i am convinced it out super committee were able to achieve a substantial reduction in spending this would unleash the power of our economy. entrepreneurial confidence would increase and the united states would stop standing on the world's doorstep.
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the president's -- nebraskans are interested in common-sense solutions. it is time to coble, to be big, let's get it done. >> lamar, than some other house members. >> thank you. most americans, if they saw this scene they would say, i did not think that was possible. i did not think you could bring together democrats and republicans to agree on anything, let alone one of the most challenging issues we have ever faced on capitol hill. it is a fact. men and women in here today have taken a hard look at the challenge that faces the super committee and have said, we stand behind you, we want you to succeed, we will do everything to help you. we encourage you to be bold in your mission. look beyond the $1.20 trillion.
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going bigger is better in terms of the impact it will have. we get it. we are turning this economy in the right direction so we can grow in a fashion that inspires confidence around the world. it is easier politically. does not sound right. it sounds counterintuitive. when you put enough on the table that los of political, -- on the table that both political parties realize this is worth the risk, if we stand together, we can achieve something that no single individual can achieve. i hope we will keep what we have in mind here moving forward. first, with the super committee. we wish them well and it beyond that, we take this challenge and except it -- accept it as the challenge of our political generation. this is our chance to make a
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difference. there may not be another chance. there may not be an issue of such magnitude. this is our moment. let's seize that moment let's succeed for the good of this nation. >> this is about more than money, it is about whether the president in the congress can govern. about whether we can face up to the biggest problem facing our cup -- country. can we solve that problem? we can. we have a laid out for more. we have republicans who have put revenue on the table. we have democrats who have put entitlements on the table. both need to put more on the table to get a result. we support them. >> there is something in this for everybody. i am a progressive democrat. i believe in the importance of
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medicare. those who believe in medicare have to take the lead in making sure it is sustainable. this go big effort is the best way, where everything is on the table, we can make the tough decisions. folks who are counting on medicare, medicaid will have it. social insurance programs around the table, there are sensible reforms we can make and will make by working together. it will be done much more easily if we go big and kobold. -- go bold. >> good morning. for me it comes down to one word, confidence. we are standing here because we want the super committee to have the covenants that we are there to support them. we are there to urge them to do the big things this country expects. it is also about the confidence
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that america is expecting all of us to work together. we need to instill that confidence that we are not broken. we can work the other. to instill confidence, not only domestically, but rep the world, that we can control our debt. we have answers and solutions. by working together, we have the best and brightest minds. america can still do anything. thank you. >> questions? >> a question for senator warner. they are struggling to get to $1.20 trillion. lineup together a deficit- reduction package? >> -- why not put together a deficit-reduction package and
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push it through? >> we need to give them time to finish their work. there is work done that could be a template. let's let them get to the 23. >> the questions seemed to be not whether -- what did they will get any deal at all. -- whether they will get any deal at all. >> the reason you have all of us here is to say, at a time we understand it is a struggle. dick durbin says it best, going big is better. it is better for both sides. i think this group here is a very impressive group of people who say, we are going to support you so get there.
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that is the whole purpose of us being here today. >> you have democrats saying they are going as far as they are going to go on taxes. >> i think we are here to understand -- express our support for success. failure is not an option. our country needs us now. that is why we are here in them to succeed. i know what the public comment have been. i am heartened. i have talked to all 12 of the members. i talked to the speaker yesterday. i believe that all of them feel the importance of this at effort -- the importance of this effort. >> is that something you are
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considering? >> it has already been done at three times. -- done three times. if they are not successful, one of those plans could get a vote. let's hope that the super committee, leadership of both parties took a courageous that in early august in setting up the super committee. they felt this was a way to reach a resolution. we are not only supportive of the super committee, we are supportive of that effort. we want the leadership to get behind this effort to make sure it gets across the finish line. >> [inaudible]
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>> i would ask one of my senate colleagues. >> each of us have stated our preference for the way we would do it if we are doing it ourselves. the republicans who say they do not believe raising taxes is the right way to approach the solution come from that perspective. what we are here today to say is that we are ready to make the compromises and build these solutions that can help bring all the parties together. if we go big, it becomes easier to put the issues on the table and find the solutions that can help us move forward. the fact that he may have members that have different ideas about how far they would like to go on taxes or entitlement reform does not mean that they are not ready to
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stand here and make the decisions that will help us as a nation solve our fiscal crisis. >> this is the guy who supported -- who was a key member of the gang of six. >> i think we will end on that note. thank you very much. >> that was great. >> go that way? [indistinct conversation] >> a reminder, the joint select committee is charged with issuing recommendations to reduce the federal deficit by
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$1.50 trillion over the next 10 years. reposal is due next wednesday before the thanksgiving recess. the super committee is tentatively preparing for a public session early next week in which the text of an agreement would be discussed. [indistinct conversation] >> tomorrow, the tea party that commission will put up its tenure proposal for balancing the federal budget. a number of republican senators will join the beating -- meeting. live coverage at two o'clock p.m. eastern on c-span 3. >> c-span.org is now easier to
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use. there are 11 video choices, making it easier to watch today's event. there is a section to access our most popular series and programs. we have added a handy channel finder to you can quickly find where to watch or three c-span that works -- so you can quickly find where to watch our three c- span networks around the nation. >> the ceos of fannie mae and freddie mac support executive bonuses. they testified at an oversight committee hearing. the federal government has given $170 billion to fannie mae and freddie mac. this is almost three hours.
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>> the mission statement is we exist to secure two fundamental principles. the american people have the right to know the money the government takes from them is well spent. the american people have the right to a government that works for them. our job is to protect these rights. our responsibility is to hold the government accountable to taxpayers. taxpayers have a right to know what they get from the government. we will work in partnership with citizen watchdogs to deliver the faxed to the american people and bring reform to the federal biographee -- bureaucracy. this is our mission statement. >> let's see.
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you are drawn down 10 million- dollar bonuses after america went to the worst economic year? you guys caused the problem? i have seen bonuses in the terms that of their existence to the american people. i did not run for office to help out a fat cat bankers on wall street. even as they are relying on assistance from taxpayers. it offends our fundamental values. the only ones who are going to be paying out these bonuses are those who have paid back the money. if they are in good enough shape to for bonuses, they can pay back every penny to taxpayers. >> i now recognize myself for an opening statement. in march, 2009, reports
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revealed that after receiving a tax payer funded bailout, aig executives had awarded bonuses to top executives. as we have just seen, president obama called this obscene and shameful. he believed the taxpayers should be paid back before millions of dollars in bonuses were paid out. freddie and fannie have become pawns of the government. it received a hundred $69 billion -- $169 billion. despite this outstanding balance, their top six executives received $35 million in compensation. of that, quote $0.79 million for bonuses awards -- $12.79 million
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were bonus awards. they even paid a signing bonus. that could be partially because they left compensation elsewhere. there are plenty of talented people looking for jobs on wall street here today. the signing bonus was given with no correlation to performance. simply a recruiting tool financed by the american taxpayer. this bonus -- these bonuses have come just as they have asked for an additional $13 billion in handouts. this is a reported third quarter loss of more than $10 billion. i think we all understand that we are not paying bonuses for profit. bonuses, under current law, compensation must be tied to
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performance. our committee has asked for and received scanned documents about performance required. none of the documents received would have qualified when i was on the board of a public company for a due diligence by the compensation committee. vague assertions of what one needs to do which can be met simply because you were there does not pass the test. we are here to ask the simple questions on behalf of the american taxpayers. who is footing the bill? you agree with president obama that bonuses should not be paid out to anyone until the american people have been paid back in full? do you believe in the concept of pay for performance? do you believe your performance warrants this type of bonus? should you profit?
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are you -- are there any measurable standards to about with the performance within the document we have received -- to evaluate the performance within the documents we have received? are you any closer to enlighten freddie and fannie? are these being rewarded for the effort to minimize losses or are they paid us -- payouts to the four, i will not read the rest of that -- favre it helps -- are they payouts? are they on a political agenda? let me make it clear, this committee believes that two
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dozen a law requires you to minimize losses to the taxpayer. businesses trying to take more money from the taxpayers and getting more people into homes they cannot afford has not been authorized. i now recognize the ranking member. >> thank you for calling today's hearing. thank you to green to my request -- for agreeing to my request. we have been engaged in a series of high-level meetings over the past month. some of these have been heeded. others have been constructive. i have appreciated his willingness to appear. executive compensation is a worthwhile topic for this committee. we should examine, not only, the
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compensations of executives, but also at wall street firms of the short-term financial interests ahead of long term interests. in the packages of fannie mae and freddie mac executives, we will have tough questions for a witnesses about how they get bonuses for achieving performance goals they had nothing to do with. for increasing affordability in the housing market that has been tanking. we will examine why fannie mae and freddie mac have done so little to fulfil the key goal of the homeowners. congress passed the emergency economic act. the president cited on october 3, 2008. that states that among other
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objectives, fannie mae and freddie mac shall implement a plan that seeks to maximize homeowners. we do not agree on much, but we agreed that efforts to assist homeowners have been inadequate. the program was supposed to help up to four million homeowners modified their love. -- modify their loans. harp was supposed to help up to 5 million borrowers. fewer than 900,000 have refinanced to date. where we part ways is how we respond to this problem. the chairman and other republicans believe we should stop assisting home owners, abandoned efforts to address the housing crisis, and allow millions of additional foreclosures.
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i come from a different place. i believe we must redouble our efforts. we need to buckle down and do the hard work necessary to develop solutions that will address this crisis affectively, a sufficiently, and definitively. it is too easy to throw up our hands and blame this entire crisis on individual homeowners. those individuals are certainly out there. there are many more who did absolutely nothing wrong. they paid the mortgage every month. now they are in the water through no fault of their own. they owe more on their houses than they are worth. they cannot sell their homes. they cannot move to a new city for a new job. they are in limbo along with our entire economy. the foreclosure crisis does not affect only the individual for
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it lowers the value of homes. it erisa's commerce across the country. it affects each and everyone of us whether we want to admit it or not addressing the housing crisis -- not. addressing the housing crisis is key to our economic problems. housing is ground zero for the economy's problems, high unemployment, and a loss of jobs. as ben bernanke testified, it will be impossible to resolve our economic situation when people are losing their homes the rate they are moving them. let me conclude -- they are losing them. let me conclude. in 2008, congress passed a law
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that made fannie mae and freddie mac maximize assistance to homeowners. this has not happened. we are in a culture of mediocrity. nobody should be receiving bonuses. with that, i yield back. >> i thank the gentleman. all members will have five days to include their opening statement. we now recognize our first panel of witnesses. mr. michael j. williams is president and chief executive officer of fannie mae. charles holderman jr. is chief executive of for a mac and mr. edwards tomorrow is acting director of the federal housing finance agency. pursuant to the rules of the committee, i would ask you all to rise to take the oath. please raise your right hand. new use as olli square or affirm that the testimony you are about
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to give will be the whole truth and nothing but the truth? let the record a kid that all of the witnesses answered in the affirmative. please, be seated. i will have the heaviest gavel in the world today, but i will tell you that when the green light comes on, try to summarize. it with that, i recognize mr. williams for five minutes. >> chairman, ranking member, members of the committee, i appreciate the opportunity to speak with you today. >> the microphones are very point thispecific. please be aware of that. rex i appreciate your to energy to speak to you about this compensation program that was put in place by this team. the fannie mae has a group of
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talented individuals working to carry out work in the housing and finance market. the complexity of the challenges that we face each day requires deep experience and expertise and a seasoned leaders. the executive management in place today is different than the team that ran the company prior to conservatorship. the real working to achieve the goals of conservatorship. our goal is to provide funding to the market, help struggling homeowners, and reduced losses on loans originated in a prior to 2009. fannie mae is the largest source of funding for the u.s. housing market since january of 2009 with the support of the federal government. the company has provided more than $2 trillion in funding for the market. we have health approximately 1.7
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million homeowners purchase a home, and we have provided financing for nearly 1 million units of quality, affordable rental housing. a fannie mae is also acquiring new loans with an appropriately conservative underwriting standard to promote sustainable homeownership. the mortgages purchased are guaranteed and since 2009 have strong credit quality and are performing well. the new loans account for almost 50% of the loans guaranteed by fannie mae. of these will be valuable assets that we expect will reduce taxpayer losses. every day, a fannie mae works to mitigate losses on the company's 2005-a 08 books of business. -- 2005-08 books of business. for distressed homeowners, home retention solutions keep families in their homes.
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we expect this will reduce fannie mae's credit losses over the long term. since 2009, fannie mae employees have helped approximately 1 million homeowners avoid foreclosure through modifications and other solutions. unfortunately, foreclosures are not always avoidable. when foreclosure resort -- when for closure is the only option, we help to stabilize communities by acquiring the homes and selling them to do families who will give them preference and live in them. we are proud of the work we are doing to serve the housing market. however, there is great uncertainty for the company and its employees. there will be gst reform, but we do not know when or what form it will take. this uncertainty makes it very difficult to attract and retain employees with highly specialized skills and experience.
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this is particularly true as other financial institutions can offer a long-term career opportunities, and in many cases, substantially more in salary. if we are to continue to build the stability cannot our housing committee, we must retain and recruit qualified executives and employees. as ceo, i am response both for ensuring that we effectively manage the resources that we have received. to accomplish this, we have employed a talented professionals. these employees to effectively manage 18 billion loans. in 2009, as a j.k. worked with -- as a.j. worked with the leadership of our board. under this structure, we have spent the rest -- we have
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substantially reduced conservatorship level. and we have reduced our senior managers at the company by 30%. in closing, i am proud of our team and of their dedication to our important work in serving the nation's housing market. our ability to attract and retain top talent remains a critical priority as we continue to strengthen our business and deliver value to american taxpayers. thank you, and i look forward to your questions. >> thank you. mr. roldan? >> chairman, ranking member, and members of this committee, thank you for inviting me to appear today. my name is ed holderman, and i am ceo of freddie mac. i joined freddie mac in august, 2009, almost a year after the company was placed into conservatorship by the federal housing finance agency.
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i welcome the opportunity to be here to address your concerns about compensation for our executive team. let me begin by saying i understand why this hearing is necessary. i understand why the american people are as outraged about executive compensation in general. i understand totally why congress and the american people are outraged by executive compensation at companies that have received federal support, including fannie and freddie. we have 9% unemployment in our country and there are millions of families at risk of losing their homes. i understand the of rage. how then -- the outrage. how then do i reconcile the compensation system and freddie mac and the suffering that so
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many families are living with? let me see if i can explain the dilemma i face. my number one objective since taking the job in the summer of 2009 was to keep the company functioning. i concluded that there would be more families hurt, and the pain would last longer if there was a break down at freddie mac. my focus was on keeping the machinery functioning while in order to do two things. first, provide the liquidity to the housing market, and second, help to implement programs that would keep more of our struggling families in their homes. with this guiding philosophy, it seems to me that gradual change would be preferable to a radical change in the operations of the company. here is the strategy that we
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followed with regard to compensation and overall corporate expenses. first, we eliminated some senior executive positions. for example, we no longer have a chief operating officer, which was the second highest paid position in our company. second, we consolidated some senior executive positions, which allowed us to reduce the number of senior executives. for example, we consolidated the credit and enterprise risc functions of the company. third, when a senior executive leaves the company, we try hard in every instance to bring in a new executive at a lower compensation than their predecessors. as a result, the 15 highest-paid people at our company today receive about the same compensation that the top 15 received a decade ago. another way to look at the
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reduction in executive compensation is the reduction from peak levels. the compensation of our senior team is down 40% from peak levels pre-conservatorship. while we have sought to achieve major reductions in executive compensation without disrupting the function to the company, we have put a big emphasis on bringing down overall expenses at our company. our overall general and administrative spending in the last year is down more than $120 million as compared to our spending levels of 2009. let me summarize. i understand the reason for this hearing. i understand the outrage. we have significantly reduced executive compensation and overall spending at freddie mac. but we have tried to do it in a
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way that does not risk disrupting the functioning of the company. my belief is that disrupting the functioning of the company would put those families who are suffering at even greater risk of deeper and even more prolonged difficulty. thank you again for this opportunity to testify, and i look forward to addressing your questions. >> thank you. mr. demarco. >> chairman, ranking member, members of the committee, i am pleased to be here today to discuss debt finance oversight in the executive compensation structure for fannie mae and freddie mac, or the enterprises as i will refer to them. i will explain how the executive compensation support to the mandates of the conservatorship, howard is developed and how it
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is structured. in a few minutes i have i would like to focus on two matters. at first, fannie mae and freddie mac have been in conservatorship for more than three years. that draws from the treasury now exceed $180 billion, reflecting the losses for mortgages that originated in the years leading up to conserve richer ships. minimizing those losses as much as possible while maximizing opportunities for homeowners is the key component. and since conservatorship, the enterprises have completed 1.9 million foreclosure prevent food -- prevention actions, including 1 million loan modifications. while in conservatorship, we are also seeking to ensure the country has a reliable supply of mortgage finance. the enterprises have guaranteed roughly three out of for mortgages since conservatorship.
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while we await congressional action on the future of housing finance, fha has several projects for the future of housing standards. these include mortgage servicing, reconsideration according mortgage servicing, and establishing loan backedsures for mortgage batc securities. i recognize there is concern about executive pay at the it enterprises. i would like to make three observations. first, the executives most responsible for the poor business decisions that led the enterprises into conservatorship and that led to the taxpayer losses are long gone from the companies. second, the best way to address concerns with executive compensation is action by congress to restructure the nation's housing finance system and to dissolve the conservatorship spirit of the
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conservatorship is not designed to be a multi-year holding state. third, as conservator, i need to ensure that the people with the skills needed to manage $5 trillion worth of mortgage assets, and $1 trillion of annual new business that the american taxpayer is supporting. others may believe that this sort of talent is easily and quickly hired as compensation for below that of competing private firms, but i do not. bottom line, this is a question of judgment, judgment exercised by balancing the need to limit compensation as much as possible, while ensuring a stable continuing operations at the enterprises in support of america's housing finance system. it has been at the age f.a.'s judgment that the taxpayers who are fiat -- were providing financial support on their
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guarantees of $5 trillion of mortgages would not be better off if we provoke a broad turnover of senior management by further slashing compensation. indeed, such pay cuts would increase the risk of higher losses in the future. executive compensation was already reduced by 40% on average when the compensation program was put in place. i would also note that continued employment in the enterprise means that your work is under much higher degree of scrutiny than at other private firms. executives that have spent their career developing reputations risk tarnish to their reputations in a heartbeat -- highly charged environment in which these companies operate today. this is true regardless of how well they perform their duties or how great financial sacrifice they may have made by forsaking other private-sector opportunities in order to assist the country's housing finance
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system. there has been intense criticism launched ad corporate executives not even employed by the companies when the bad loans leading to the majority of today's losses were books. people arrive after conservatorship to try to make things better. i am trying to encourage these people to stay and to mitigate losses and to keep the current infrastructure of the country's housing finance system operating. to repeat myself on one thing, the only way to finally resolve this question is for congress to act to end the conservatorship of and chart a new course for the housing finance system. mr. chairman, i thank you again for this opportunity and i look forward to responding to the committee's questions. >> i now ask unanimous consent of the salaries of the various officials going from the president and the vice president down to yourself, mr. demarco, mr. holderman, and mr. williams
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be admitted in the record. without objection, so ordered. in addition, i would ask unanimous consent of the article yesterday in "bloomberg news week" be placed in the record. without objection, so order. and last but not least, i would ask that the committee report be placed in the record. without objection, so order. i now recognize myself for the first round of questioning. mr. williams, you are a career employee, right? you came up through the ranks? >> reisch. >> -- right. >> and what did you make in 2002, do you recall? >> what did i make in 2002? i do not know off the top of my head. i would have to follow up with you. >> give me a year more than five years ago what you made. >> again, i do not have that at
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-- off the top of my head. >> what was your starting pay? >> i would imagine it was around $115,000. >> could you speak up? >> i would imagine it was around $115,000 when i joined the company over 20 years ago. >> 20 years ago you came to work for an organization that page you $115,000. they paid you more then than they pay congressman. that has not changed. >> i would assume so. >> but less than the presidential. he was still making perhaps the $200,000 back then. you do not remember what you made 10 years ago, but you remember roughly $115,000 when you first started. when did you first make over $1 million? i have the luxury of making it $1 million. i remember when that happened.
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i am sure you do. >> i am not sure when that was. >> money is not that important to you? >> money is important to all of us who are here today. >> by your a career government agency -- but you are a career government agency employee. >> i have been an employee at fannie mae for 20 years, serving in a vast array of all roles all the way up to chief operating officer. >> i do not want to beat a dead horse, but you came on at $115,000 at a company backed by the government. did you ever have the inclination that he would make -- you would make the seven figures, but several of them, of 2 $9 million over two years? >> i had hoped to improve my
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compensation, as we all do. >> but last year you made $9 million, while the president makes $400,000. and you think that is ok? >> i have been asked to lead a management team that can help achieve the joke -- accusinachie goals of conservatorship. >> but you are still losing money. you take in $90 billion a year and you get $9 million a year. bloomberg and other organizations were concerned when you came on board because you do not come with a background like mr. williams does. basically, you are not qualified to run the organization if one were to look at your historic resonate -- resume. what did you make last year? >> i do not recall. >> did you make more than $1 million? >> yes, i did. >> was your compensation tied
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tightly to performance? >> yes, i was. >> was a tide tightly -- was it tied tightly to performance in that you could look at the yields and see what your bonus would be? >> it was tied to the funds and the economic performance of the company and i had equity participation as well. >> equity participation always assumes that the stock goes up, right? >> it does not always. >> your options were worthless if your stock went down. >> that would be correct. >> i freddie mac, has your stock gone up? >> in my tenure it has not. >> $7.8 million in the last two years is based on a company that is not worth more today. just for the record, if i were to look at the net profits for fannie mae from 2003 through
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2010 i would find the net profits were an $11 billion loss. at freddie mac, i would find a $72 billion net loss over the same time frame of nearly a decade. including the time when you came in in which the books were effectively being cooked by taking in bad debt and there were paper profits of $4 billion and $5 billion, but your organization that lost $14 billion in 2010 is going to lose equal about this year. >> yes, we have lost money due to loans that were put on the books during the timeframe of 2005 through -- >> my time has expired. i just want one more thing for the record. mr. demarco, from what i can tell, your $230,000 salary is
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all you get, right? >> yes, i all i get is my salary. >> and you do stay with the company even though you could get more somewhere else? >> i am still here, mr. chairman. >> mr. altman and mr. williams, you come from a different world -- mr. haldeman and mr. williams, you come home a different world than the one i come from. if i had made $1 million i would remember when i did. you said in your testimony that part of the compensation that these executives receive is based on their performance. but with all due respect, their performance and joerres has been deficient, especially in the area of -- their performance and yours has been deficient, especially in the area of helping homeowners. congress passed the emergency
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economic stabilization act and the president signed it on october 3, 2008. it states clearly that fhfa, freddie mac and fannie mae cannot shout implement a plan that seeks to maximize assistance -- fhfa, freddie mac, and fannie mae will implement a plan that seeks to maximize assistance to homeowners. i have not seen that. what i have seen is dried out work by the congress. the home loan modification program was supposed to help 3 million to 4 million homeowners modify their loans. so far, it has helped 800,000, correct? >> i believe that is correct. >> with regard to the horror -- the home affordable refinance
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program, harp, that was supposed to help of 2 5 million homeowners refinance. so far, it has helped fuel than 900,000 refinance, correct? >> with the changes that we have made with the program recently we are expecting an uptick in that. >> of course we are, but we are talking about what we have done today. these gentlemen are making their money out. i'm talking about today. i'm looking at performance now. mr. demarco, it was not until president obama made an address to congress on this topic that you started to revamp this program in a serious way. let's look at fhfa -- >> for the record, i actually directed both companies to work with fhfa on a thorough re-
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examination of via harp program several weeks before the president's address. >> by you could have said that earlier, could you not? >> we tried it last winter and we made some changes and i regret -- well, i do not regret anything. i would say that we redouble our efforts in august. >> mr. demarco, while you may not have any regrets, i have regrets. i have regrets for the people who are being put out of their houses. and we would like for the goals that were stated to be manifested. i understand you're like of regrets and i'm sorry to hear you have no regrets -- your lack of progress and i'm sorry to hear you have no regrets. >> please do not take my words out of context. i did not say that with regard to american homeowners. i believe that myself and the gentlemen to my right have been
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working very hard to provide assistance to american homeowners. and with regard to the statute that you cited, it is quite right. i actually cited by itself frequently. but the full implementation requires that we bring this to the homeowners in full consideration of the nad value to the taxpayers, and that makes what we are doing in terms of providing relief to homeowners and the mandate as conservator to minimize further losses to the taxpayer. >> and it demanded that you will implement a plan that seeks to maximize assistance for homeowners, and the use its authority to encourage the servicers of the underlying mortgages, and considering net present value of the taxpayer, to take advantage of the homeowners program. is that not correct? >> that is it, sir. you raise an excellent point. it is one of the key accomplishments that we have
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had. this summer with the servicing alignment initiative that fha manage with fannie mae and freddie mac to provide uniform standards so that servicers would know how to effectively, efficiently, and timely response to troubled borrowers. i think we learned from the difficulties in the last few years and we put in place an identical set of requirements that fannie mae and freddie mac both have. the servicers now have clear instructions and -- and positive incentives to make early and robust contact with borrowers to find out what the difficulty is. we're placing the emphasis on getting immediate contact with the bar work and try to find a solution to the difficulty. we have learned that the faster we do that, the greater the likelihood of success.
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>> i will ask unanimous consent that you have an extra minute. >> thank you. defense, andto your i do not considered a defense -- -- and i do consider it a defense, and rightly so. i say to you, do not mistake a comma for a period. that is what troubles me, and many members of congress. i'm not trying to hurt your feelings or anything like that, but i've got to tell you, i am talking about some people who are in pain, i mean, big time. i beg you, do not mistake a comma for a period. >> i appreciate that and i have benefited from our discussions in the last couple of months and
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i remain committed to making sure that fannie mae and freddie mac in conservatorship are doing all robust things to help american homeowners in their troubled mortgages. i am taking into consideration all of the things that you have told me, sir, and i do believe we share a deep concern for the american households that are troubled, and we share a desire to provide appropriate assistance to them, and we will continue to improve our efforts, mr. chairman. >> thank you. i now ask unanimous consent that the entirety of the act, hr 3221, be placed in the record. and i would cite the powers of the conservatorship may take such actions as necessary to carry out the business of the
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regulated entity and to conserve the assets and properties of the regulated entity. i believe that is what the gentleman was referring to. with that, we recognize the gentleman from michigan. >> thank you, mr. chairman, and i thank you, gentlemen, frofor being here. i heard you state that you appreciated as inviting you. thanks for your use of words here. i could not have said that myself. however, this is a duty that we have to do. mr. demarco, $12.9 million in bonus pay for executives we are discussing today, bonuses that you approved was four -- was for providing "liquidity and stability to the housing market. -- to the housing market."
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in light of that, what benchmarks are fannie and freddie meeting that would allow such bonuses to kick in, especially in light of the taxpayer losses of approximately $170 billion ta? >> it is detailed in the filings of the two companies, but i have provided in my written statement, these losses that happened were pre- conservatorship. one of the focal point for the executive compensation for fannie and freddie were their efforts to try to minimize losses on that book of businesses. they cannot undo mortgages that are made. but they can take aggressive actions to litigate those losses through loan modifications and other foreclosure prevention activities.
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our report monthly to the house financial services committee and the senate banking committee on the efforts that have been to that end, and the array of efforts to ensure there is ongoing liquidity in the market, and to be working with us on things such as the servicing improvements that i talked about. >> but in light of all that continues on and in light of what mr. cummins mentioned about his people, likewise in my state of michigan, you stated your opposition yesterday to be on par with a federal pay scale, a position that you continue to suggest today in comments, i believe. a legislative proposal that was passed out of a house financial
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services yesterday to do just that, why do you oppose that? or do you oppose that? and do you believe the federal agencies cannot perform their duties because they do not offer wall street-sized paychecks? >> i oppose it simply for the matter that i believe and acting and immediately putting all of the employees on a completely different pay scales will result in the taxpayer losses of fannie and freddie going up and not down. that is it could simply. the german red from the legislation regarding conservatorship. -- the chairman read a piece of legislation regarding conservatorship. an important? -- an important aspect of that is that these are business entities. they are regulated agencies. they are not government entities. if the congress wants to make action to make these government employees, that is a different story and legal structure than
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the one i am being held responsible for overseeing today. what i am being responsible for overseeing today -- the way the law works today, fannie mae and freddie mac employees are not government employees. these are not government agencies. they are private corporations there are undertaking trillions of dollars in the marketplace. they continued to be subject not just to regulations, but to other laws that apply in the financial industry. >> i understand all of that. our citizens do not. we are in tough times and sometimes difficult decisions have to be made, and indeed, if there are public services that are provided, there are challenges that we face. mr. holderman, in october you had announced that he would be stepping down once a successor
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has been made. >> that is correct. >> did compensation play any role in that? >> no, i did not. >> mr. williams, earlier this year you said you would leave it to fha to determine what your corporate compensation should be. if mr. demarco decided it should be curtailed, would you be ok with that? >> i would be -- i would leave it to the board and director of tomorrow. >> i now ask to enter into the record a study of 2011 compensation done by the association of corporate counsel, southern california chapter, for 2011. and i would note that in public companies, the compensation in 2011 was approximately $400,000 for general counsel. the general counsels of freddie
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mac received $2.9 million, and freddie mae -- and fannie mae received $2.6 million, much more than the general counsel believes is fair. >> because the theme of the hearing is regarding protecting the american taxpayer, with regard to the legal departments of fannie mae and freddie mac, i would like to point out to the committee that fannie mae was fhfa taking a lead on this as conservative. there have been lawsuits that we believed would recover liability. this is to carry out responsibly are conservatorship. for us to be successfully executing on such complex litigation on such complex
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financial transactions and securities, i need to have qualified and experienced counsel to be working with us on that. i believe this is an investment that we are making that is part of protecting the american taxpayer. these are the sorts of things that if we fundamentally and radically and immediately change the rules of the game with respect to how we perceive fannie and freddie, we may gain compensation, but i would like the committee to note that from my perspective as conservative, we could risk other harms to the american taxpayer. >> i actually do not have any time. i do not want to cut you off. but i know there will be further dialogue. at this time, there will be -- at this time we recognize the gentleman from ohio. >> thank you for holding this hearing. one of the things that is interesting about these hearings is that occasionally you get
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some insight into how people think in a broader sense about those they are supposed to serve. i have to say that the witnesses, mr. holderman was the only one that seemed to understand the concerns that the american people have about the issues that face this committee today. i want to thank you for that. i also want to say that in listening to the testimony, my concern is that there may not be enough sympathy for the people that are losing their homes. and if there is a gap with tremendous pay being given to the people at the top and we do not see enough sympathy for the people losing their homes, that may mean that you just cannot get it, you are too far removed. mr. demarco, on july 1 your
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counsel wrote a letter that disclose that fannie mae and freddie mac imposed $150 million against banks for not foreclosing against homeowners fast enough. your general counsel were and here isly fees a where your general counsel wrote. of of of the total amount for all services is approximately -- "viggo amount for all services is approximately $150 million for 2010." with everything going on and the robo calls and everything else, fannie and freddie were charging huge penalties. can you explain them? >> i can explain them.
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a way to prevent servicers driving up costs to taxpayers. in my exchange with mr. cummins earlier i went into some detail about the effort -- >> there is a point that you are missing. there is an inspector general finding and you are familiar with it, that fhfa directed to fannie mae to impose fees against the servicers for violating foreclosure tie line limits. is that true? and did you direct fannie and freddie to impose those penalties in 2010? >> it is true, because it is driving up the cost to the american taxpayer. >> you were aware that abuses were going on, but you fail to address them in a timely manner?
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>> these are two different issues. the compensatory fees that had been assessed had been done so with recognition and allowance for the delays in foreclosure processing, either to -- due to assisting or worse to find an alternative, or assisting foreclosure delays with things out of their control. >> there are multiple indicators of foreclosure abuse risk and it could have led fhfa to identify and act earlier on the issue. including "consumer complaint alleging improper foreclosures, media reports about improper foreclosure abuses." mr. demarco, if you are aware of these abuses, why would you order hundreds of millions of dollars in penalties to speed up the process further? why would you do that? >> i would like to again try to
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separate the abuses and the corrections that have been undertaken in regard to them with servicers not performing adequately in foreclosing on properties that have gone multiple years without any payment because this is driving up the cost to the taxpayer. we are foreclosing on properties that have had no payments for two or three years or more. and all this time, the american taxpayer is finding those mortgages, and it is also damaging local communities and housing markets to have these properties sitting there with no action being taken against them. >> with all due respect to you, sir, the ig report talked about supporting personnel overloaded with foreclosures. documentation is evident, they said. you have not disputed that. members of the committee, where you have here is where they are
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accelerating foreclosures. >> the germans time has expired. mr. walsh of illinois -- the gentleman's time has expired. mr. walsh of illinois is recognized for five minutes. >> thank you, mr. chairman. thank you all for being here today. we talk in trillions and billions of around here. we are $15 trillion in debt. fannie and freddie have been in debt to the tune of $170 billion the last few years. big numbers, they jump out. two smaller numbers jumped out at me. fannie and freddie paid outside compensation consultants $655,000 in 2008, and $560,000 in 2009 to determine their own
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pay structure? we paid outside construct -- outside consultants tthat much money to determine our own pay structure? is that right? does that sound excessive? >> the company and the board of directors hired compensation consultants to help them structure a compensation format. >> a little closer. >> the board of directors hired compensation consultants to work with them to develop a compensation program at the request of fhfa and they work in partnership with fhfa and the treasury department to develop that. >> $655,000 in one year to help you determine your pay structure? mr. holderman, does that sound to excessive? >> it sounds like a lot of money, but there are compensation consultants that are required for the board in
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addition to the company's compensation consultant. i think that number would include four consultants because i think you were pointing that out for both enterprises. but i agree, is a lot of money. >> you said the 15 highest executives today are paid roughly as the top five at decade ago. i do not know that is something to rave about i mean, james johnson in 1991-1998 earned more than $100 million with the company. another one earned $90 million. daniel miller earned $12 million in 2005. i do not know it is fair to compare it with what executives made 15 years ago.
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mr. holderman, i appreciate the tone you took, that you understand the outrage, certainly, that congress feels, and in theory and in practice, we reflect the outrage that is out there. but understand something, many members of congress came here because this country is broke. it's a big freshman class of republicans and democrats, most of home left much higher paying positions to come here and serve this country because this country is broke. i am not unusual. there are other members like myself who came here and i turned on my health benefits, turned down any pension benefits, because we have all got to do something pretty quickly because we are going to be in a heap of trouble, and future generations will be in a lot of trouble. i appreciate that you understand
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the outrage, but are you telling me that unlike congress and some other department in government, we are fundamentally not able to find people who need to do what they need to do at fannie and freddie for less than the amount of money in base pay and bonuses that we are paying folks? and if so, do you understand how a lot of people might find that hard to believe? >> first, i think all of us appreciate the public service of the entire congress and realize that many have made a personal sacrifice to take on those roles. and i commend the acting director demarco for the public service he has given the country. there are many examples of people who have done that. the dilemma i face -- maybe i can bring the numbers down a little bit in size.
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one of the important functions that we perform f freddie mac is -- perform at freddie mac is managing an investment portfolio. when i took over it was at $900 million. we brought it down continuously. it is now $680 billion in size. what i worry about is if they make a 1% mistake, that could cost the taxpayers $6.8 billion. if they make a one-tenth of 1% this day, it is $680 million. and the people required to effectively manage that money and the investment portfolio and not make those mistakes are highly skilled, sophisticated, seasoned people that have many, many opportunities for high- paying jobs and we need some of them at freddie mac to make sure we do not have those mistakes. >> thank you.
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>> mr. tierney for five minutes. >> i want to ask you about principle reductions, mr. demarco. but first i want to share some comments. the former special inspector general for the start program said, the owners of these underwater mortgages have already lost any meaningful chance of recovering the outstanding principal. the sooner this reality is recognized and addressed, the sooner a recovery can take hold. a principal reduction program is necessary. the former vice chairman of the reform act has supported this. ben bernanke has said that restoring equity in the homeowner -- for the homeowner may be a way to avoid foreclosure.
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to do this quickly and effectively would help with loan modifications and right-doubt. and when congress passed the loan modification of 2008, we instructed fannie and freddie to implement a plan to maximize the system for home owners. we have been through the language on that. but it does talk about encouraging taking advantage of these programs to minimize foreclosure. there's nothing in the law that prevents you from improving a program if it is in the taxpayers' interest. fannie mae says the average return to fannie mae this year on foreclosed properties is 55% of unpaid principal balance. you will lose 55% of the foreclosed properties. if that is the case and would only lose, say, 5% in april to a
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reduction program, why not lose that to keep the buyer and a home? >> the analyst went through this at fannie and freddie and looked at the alternative programs available and we have concluded that the use of principal reduction within the context of a loan modification is not going to be the least-cost approach for the taxpayer to allow them to stay in their home. we are using aggressive activities that include principal forbearance, which will 0 the interest rate charged on the underwater portion of the mortgage without lowering the debt of the mortgage. that has been the basic oculus that has guided this decision. -- the basic calculus that has guided this divisiodecision.
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we are supposed to undertake our loss mitigation activities with regard to the taxpayer. >> by you have been empowered as concert riggers to have the fiduciary responsibility of vaccinating -- maximizing assets. if it is less costly to maximize the loan then go to foreclosure, i would think that would be a break of the fiduciary duty. that flies in the face of all of these people i just quoted. maybe you could share your calculation, so we could run it by some of the people who see it differently than you do. several of the banks are doing prince of reductions right now. -- principal reductions right now. the excess principle is forgiven over three years as long as the homeowner is current.
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according to the company's ceo, shared appreciation modification provided a significant benefit to the customer, the economy and the housing market. they are not doing that to be nice. it is in their financial self- interest. i still do not think you made a compelling argument of why that is not in sanney may or freddie mac's self-interest -- fannie mae or freddie mac's self- interest to do that. is everybody else wrong, mr. demarco, and fhfa is right in this? >> congressman, i believe the the decisions that we have made with regard to principal forgiveness are consistent with our statutory mandates. i believe we are taking all due effort to provide assistance to homeowners, and i do not believe by unauthorized to use
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-- and i have been authorized to use taxpayer money for loan forgiveness. >> mr. demarco, i would like to -- you to do two things for the committee, if you could. first, identify anything the statute that prohibits prince or reduction programs. second, i would like you to submit whatever analysis that shows why reducing the principles in some mortgages is worse for the taxpayer. can you do that for us? >> we can provide that information as you have suggested. >> the gentleman's time has expired. the gentleman from texas. >> thank you. gentlemen, mr. williams and mr. holderman, i would like to start my questions with you. first, i want to commend you for being here. if i were taking a salary like
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you guys were in these times, i would be reluctant to be here. i admire you for taking the heat on this. do you compare your salaries to those made in private sector companies? those private-sector companies, very often the compensation package is designed around specific performance results, but you basically serve at the pleasure of the board of directors and shareholders. and at fannie and freddie, you are basically beholden to the taxpayers. this committee and congress is about the total level of oversight that we have. what i have heard from people back home is pretty consistent. wow, what are you taking this much money a performing so
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poorly and having to come back? i have heard you say that we would be doing much worse if we were not doing what we do. let me ask you this, would you invest in danny and freddie? would you put your own money in that and expect to see a return? i guess i will start with mr. williams. >> congressman, let me start with a few things. first, to your comments, the losses that we have been incurring are due to the loans books prior to 2009. secondly, the management team that we have brought in is a new management team to deal with the challenges we are facing, and the specific issues that we have been asked to serve at -- to do at to serve as conservative a pretty -- conservative. we have been asked to stabilize the market and help distressed homeowners where they are. >> i understand, but you started
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up this company 20 years ago at well over $100,000. you have been through this. where bird you kicking and screaming and saying, hey, we are about to get in a lot of trouble? but congressman, i am happy to discuss my role prior to conserve version. in the leave -- in the years leading up to the conservatorship by was the chief operating officer of the company. i was responsible for managing regulatory agreements and making sure we achieved all of the objectives under that. i was responsible for financial statements and getting all of the sec filings. i oversaw the company areas such as technology, human resources, as well as -- >> but from an executive level, didn't you have to see some of this coming?
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>> congressman, in hindsight, i'm sure we all wish we could have made different decisions in that time. >> i think it would be fair to say there are a lot of people that take jobs for less money than they would make in other jobs for reasons beyond compensation. take the president. it does not pay all of that well. the supreme court does not pay nearly what a good lawyer can make in the private sector. and certainly, the teachers who are underpaid throughout this country, take jobs for reasons beyond compensation. look at the leadership of citigroup. he said he will not take any compensation until the company turns a profit. don't you think we could get qualified people to do your jobs and the jobs of other senior executives without having to pay millions of dollars? >> congressman, i'm happy to address that question because,
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first of all, as i have noted, this is a new team. we have reduced executive compensation by 50%. we have reduced the number of senior executives by 30%. are these jobs competitive? yes, in the course of three months, i lost five senior vice president. and lost them to financial services and other companies where i can assure you they are making more money better career. these are challenging jobs and challenging circumstances. we need to reward the people who were doing the jobs. >> i apologize for not getting to you. thank you. >> you are recognized for five minutes. >> when you announced these packages in 2009, you issued a press release explaining the
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salaries were necessary to " attract and retain the talent needed" for them to perform their roles. in a recent letter you wrote that you were concerned about a turnover of management and staff and people in the technical area. there were thousands of employees. more than $2 trillion in financial obligations. what kind of analysis did you do prior to these conclusions? did you survey the current staff? do you have some kind of document you could share with us that would demonstrate the potential of beck's of lower salaries -- affects of lower
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salaries on the agencies and homeowners? >> with the announcement said the pay structure, the background for that was developed over the course of time by by predecessor. when i became acting director, it was done in a consultation with other government agencies and with consultant's and consultation with the special master for compensation to assess what was the market like for compensation in troubled debt complex institutions and what was the right structure and balance to weigh the need to have competent individuals
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against market conditions at the time and the market opportunities. that was all part of the determinations. >> let me just ask you. my time is going to expire. earlier this year, the inspector general for the housing agency issued a report evaluating your oversight of executive compensation of fannie mae and freddie mac. they stated that "you never seriously considered" comparing compensation at other housing agencies. it is that true? >> we did not consider the fha commissioner to the market comparable to private companies that operate with all the
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liabilities and responsibilities. we are well aware of the compensation that those executives have. >> you are saying that you did not make a comparative analysis of the housing agencies that might have some of the same response ability, although certainly not as much and of exactly the same time? >> yes. we did not find it to be comparable to private companies who are operating in marketplace. >> do you think the federal housing administration and other agencies whose seemingly were doing much better did not take into consideration the same factors and same markets and the
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overall conditions of the economic climate? >> i am not sure i follow the question. the government employees have a different set of benefits and personal liability or lack thereof when it comes to their engagement. i do believe i have respect for people who come into political positions. they take a huge cut in compensation for the opportunity to be direct blare in system -- player in the system. these are temporary positions. i do believe the leadership of a company that has to dollar trillion worth of obligation needs to have the people. -- $2 trillion worth of obligation needs to have the people. we need to minimize the loss to
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the taxpayer in terms of the overall situation we have. that is why i said in my business statement, i wish we could have the administration and congress get together and come up with legislation that will bring these conservatorship since to an end. >> thank you very much. >> thank you. >> let me just say the problem started in 1994 when we were loosened up the underwriting standards. to give loans to people who cannot afford to make the payment is crazy. i was an underwriter for an insurance company. i know how it works. you do not do it. it is not rocket science. the minute you get a loan to someone who does not have the capability to make the payments,
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you created a mess that is inevitably going to end in disaster. that is what you inherited. you're there for 20 years. i do not know how you did not see part of this. the problem is apparent to somebody who has any idea how finances work. let me ask a couple of questions. you had an outside entity make a recommendation on compensation. you as conservator made a recommendation to the board. that was approved. is that the way it works? >> i have responsibility. >> you may decision on compensation. >> ultimately. this is before i became director. >> we talked about this before. for legal counsel, the 2010
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salary for public companies was averaging about 266,000. the bonus was about 104,000. it was around 400,000. for the private company, it was 204,000. the bonus was around 100,000. the general counsel got $2.9 million in 2010. the general counsel got $2.6 billion in total compensation in 2010. i understand they have expertise and they had to have a good step in order to make sure the litigation was processed and pursued in rapid way. that seems very excessive to me. i am sure you are competent in many ways. i do not have the time to go into the qualifications. when you look at the salaries
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and you realize the problems that the country faces, it is excessive. i do not think anybody would disagree with that. i am very disappointed. did you talk about being very cognizant of the taxpayers' money. i am disappointed that this page is being given with the bonuses when it is far in excess of the private sector in most cases. you inherited a lot of the problem. i understand that. the underwriting was terrible before. i do not know how we will get out of this quagmire. it is excessive. we have to have competent people. we have to make sure we have people who can do the job. when you start getting the salaries out, you have to make sure you are not being excessive.
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i am sure you're trying to do the job to the best of your ability. i hope you will try harder. if you have recommendations on what congress can do to help deal with this problem, i would like to see it. i would like to see fannie mae and freddie mac be done away with and go back to the private market where sound business principles are applied to make sure that people are buying these houses. they will help everybody out, especially those that cannot afford them. it is digging a bigger hole. that is why this country's in a mess. i yield back. >> mr. towns is recognized for five minutes. >> thank you very much. let me begin by saying i want you to help me to be able to determine how you arrive at these bonuses. i know in education if you are
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able to lower the dropout rate and improve the reading scores and have great retention in terms of of students graduating on time or staying in school and the teacher gets a bonus. i think that makes sense. they have done something outstanding. now they are rewarded. tell me how you're right that the bonuses. >> fha in consultation with the boards of each company develops corporate scorecard for each company outlining an array of areas of performance regarding minimizing losses in in tax errors, mediating the operational and risk-management weaknesses and ensuring that businesses operated effectively and efficiently.
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there were items that were put into the corporate scorecard. these are scored by management at the end of the year. they are then reviewed by the board of directors. the structure has the following components. you set a compensation for each executive that is a line to be at below the median of a comparable firm. a third set aside to be paid on a target incentive opportunity or a bonus. that is paid out over a two year timeframe. the majority of it is held off
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as a deferred salary. furthermore to incentivize performance there, a portion is tied to the corporate performance, allowing for a reduction in actual amount of deferred salary that is paid it a performance does not measure up. we have done these assessments and we have not awarded full amount for the deferred salary or for the target incentive opportunity. we have rewarded less than the target amount. >> my colleague indicated in terms of what happened in 1994. one thing we're not considering is the fact that in of many families one person has lost his or her job and that has created
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problems along the way. when i walk the streets in my district and i listened to the people that are losing their homes, you look at the salaries and one would say why don't we take the salaries and save a whole block? this is what you're hearing from people back in the district that i represent in brooklyn, new york. do you hear people talking about is excessive salaries? >> i do. i hear from members of congress. all i can say is that i believe we're trying to strike a difficult balance between insuring that these multi trillion dollar companies have the appropriate expertise and that we are keeping the salaries as low as possible while ensuring we have capable people. and that the people that are there are focused on helping
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homeowners. we are committed to trying to help troubled homeowners to provide alternatives. >> i am not sure -- the reports included that your agency failed to act on foreclosure of these issues until the middle of 2010. even though there were multiple indicators through the time that would have led you to act earlier. are you familiar with this report? >> i am. >> let me ask about one of the foreclosure firms in new york. over the past week, both fannie mae and freddie mac constructed services not to issue any new foreclosure cases to the firm. why did they just now dropped this law firm? why did it take so long that i
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want to find out. why did it take so long? yes. >> we are constantly looking at our law firms. we find when they are not performing, and i feel your concern, we take action as quickly as possible. to we prudently move the cases so we do not incur additional losses to the taxpayer. >> that should be considered in your evaluation as well. thank you. >> i think the former chairman. i recognize mr. kelly. >> i will yield back my time. >> i certainly appreciated the gentlemen yielding. to mr. williams, because of your service in government, are you
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both aware that federal ig's have the right to request information and assistance from the regulated institute? >> yes. >> i am aware as well. >> it was brought to me that employees resisted document requests made by the fha office. he said the request must go through the fhfa. were you aware of this? >> we are fully cooperated. >> it was my understanding that we were cooperating with any requests with ig and coordinating it with our counterparts at fhfa. >> if you both met full compliance? >> we worked with them
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cooperatively. >> i understand you want to give a different answer. would you commit to providing the documents and information the offices of inspector general requests? >> we have been and we will continue to do so. >> you will continue to do so. is that correct? >> ps. >> the only copy at is that we coordinate it with our regulator is that weat coordinate it with our regulator. >> they must request from you in order to request from the entities that are regulating? >> the response ability is to oversee the effectiveness of
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fhfa. that is done to get the effect of some of the activities. i believe we would -- we worked out a process for dealing with that in companies that then response ability. >> in order to get that, and the t.a.r.p. oversight request information of the banks that got money. they do not have to go to the treasury to ask for that. will you commit to letting the office of inspector general directly request the document they need? >> person went to evaluations being undertaken -- pursuant to the valuations being undertaken by the ig.
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>> i yield my time back to the doctor. >> thank you. thank you for appearing before us today. the title of our hearing is "pay for performance, should they be receiving millions in bonuses." i will let you answer that directly. >> should we be paying for performance? yes, we should. are we being evaluated? yes, we are. >> yes, we should be paid based on performance. the difficulty is the contrast to my years at in private sector, where all the companies were profitable, and it was
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easier to identify performance and profitability much more difficult to do it in the kind of situation we have that freddie mac were there already are so many imbedded losses. >> the title, mr. demarco? >> i think they should be compensated at a market rate retainingws fhfa' suitable executives. >> i yelled back. -- yield back. >> the witnesses testified that part of their conversation is
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based on how fannie mae and freddie mac perform. i have serious questions about some of their so-called achievements. let me give you an example. states that credit losses were actually lower than expected in 2010. that sounds like good news but the reason for the lower losses is that many services for caught up in the scandal and were forced to halt their foreclosures during the fourth quarter of 2010. mr. demarco, how can you take credit for fewer losses if it was from the scandal? >> the performance over the last year that was better than fhfa projected is reflected only in
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part by the foreclosures. it we have had better performances then were projected and have a better performance of loan modifications than had been projected. it is reflective of the fact that the steps that have been taken are bearing fruit. it resulted in performance thean is better than what was modeled. >> let me give you another example. parted the executive compensation was based on this fact -- part of the executive compensation was based on the issuances. according to fannie mae, a day exceeded the goal. -- they exceeded the goal.
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as you pointed out, the main purchaser was the government. it seems unlikely that fannie mae could have commanded such a large share of the market without the federal reserve's purchase. you cannot really take credit for meeting this goal if it was due to deliver its support from the federal reserve. >> -- deliberate support from the federal reserve. >> it was designed to absorb rates in the marketplace. these are separate things. >> let me ask you about another example. one of the measures for determining performance bonuses for both executives was whether they provided more
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affordability to the housing market. they claim they met this goal, arguing that affordability has improved dramatically. do you know why? housing prices have tanked. are you seriously paying millions of dollars of bonuses in this area? >> that particular element is reflective of the company's response ability for meetings of various affordable housing goals. they are in a conservatorship. they were being looked at to make sure that they were not stepping back from certain parts of the market including those that are generally referred to as the affordable housing sector. they had to stay active. >> that was the benchmark,
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affordability. are you awarding bonuses because housing prices are continuing to plummet? >> no, sir. >> what is the benchmark? >> [unintelligible] >> i am mystified as to why the so-called achievement should entitle executives to million- dollar bonuses. they either had nothing to do with the actions of fannie mae and freddie mac or it is to reward a continuing downward spiral in our housing market. i cannot figure out which one it is. can you help me? >> i appreciate how difficult this is. clearly, we are all frustrated by the conditions in the housing market. we are trying to ensure that those companies remain active in
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market place a bet the country -- marketplace so that the country take all appropriate action to assist borrowers and that the $5 trillion worth of mortgages are being managed by competent professionals that can manage the risk of such an enormous portfolio. as i said at the outset, it is not our goal to keep this going. i would welcome working with the congress to get on with the hard work so we can bring the conservatorship s themselves in. >> i would encourage you to also work with the president. >> thank you.
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>> do you think fannie mae is a success and doing well? >> we have been given some very challenging goals. we need to provide critical support to the market place. there are reducing long-term credit losses. >> is a meeting your expectations? >> the team has done an extraordinary job under difficult circumstances. >> as far as freddie mac, do you think it is a success? do you feel good about where you are going? >> i would divide the company into two parts. this is a reference to an earlier question if i would
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invest in freddie mac. it is relevant. i have been in investment for most of my life. if i could divided into two part, i would invest in the company from 2009 on. i am incredibly proud of the work of our employees. we have a high-quality book. our people are committed to making sure we participate in responsible lending. >> that is the answer i had hoped to hear, that you are proud of their companies and have high expectations. since entering the conservatorship, both enterprisers have taken money from the treasury. government ownership is now the most expensive bailout of the 2008 financial crisis. it said to on a different level than private-sector companies. if there profitable, that is
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good. right now the taxpayers are paying for these. they are very concerned. getting back to the beginning of the hearing when we were talking about salaries, they made about $4.7 million and 5 ft. $1 million respectively last year. i think mr. williams; base salary was [unintelligible] big bonuses were involved to reach that $4.7 million. president obama makes 400,000. congress makes 174,000. do you think the work of mr. williams warned eight times as much pay as the president of the united states?
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>> as an economist, i believe what is perceived as the total compensation value and benefit of various positions goes beyond the salary that is there. i do not find it fruitful to compare the president with those of ceo's of major corporation. >> what about members of congress. did the disapproval rate is pretty high. we feel we were very hard. people feel we get paid too much. our deficit is $14 trillion and rising. if we were to give ourselves a bonus we would be voted out of office and should be. taxpayers are seen millions of dollars in bonuses going to the executives. i understand their outrage. you said you understood that.
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mr. demarco, you are their boss. they cannot do much without talking to you first. do you think their work is 10 times more complex than yours /? is it justified? >> i do not think anyone is going to be including me. >> are they justify? - justified? >> perce remark was designed in consultation with the special master of treasury -- the framework was designed in consultation with the special master of treasury to develop a structure. what we struck was inappropriate balance cognizant of what the market place looks like. >> bonuses should be based on
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performance. it is dubious that the performance is there for millions of bonuses for that type of debt. i understand why they are upset. i am upset. i thank you all for appearing. >> thank you. i would like to continue on this line and ask about the desire -- czar situation. when things are going well for a company, bonuses are awarded. when things are going poorly, we hear the argument that bonuses are necessary for recruitment and retention. it always seems like a good time for an executive bonus. when you announced these new compensation packages and now could 2009, you issued a press release defending the high
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salaries even though fannie mae and freddie mac are going into conservatorship after major losses. they have continued to lose money. they bailed out to $269 billion in taxpayer money. fannie mae has asked for more freddie mac for an additional $6 billion. the compensation plan that i live debt -- looked at consists of approximately $6 million for each executive. i would like to place that in the record. your basic argument that you have given to both sides of the aisle is that it is necessary to attract and retain talent. my question is, is there ever a wrong time to award lucrative
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bonuses? >> there are. we have a period when these companies were placed into concerted ship, all bonuses were eliminated. there were no golden parachute payments made to them. the folks most responsible for the company's ending up in conservatorship left without anything take them. the collapse of the stock price did much to reduce this. the difficulty we have at fhfa is that the country still needs to have a mortgage market. that need ahere government assistance to function. we replaced the leadership that led to the conservatorship. now i want to be able to attract people in to run multi trillion
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dollar companies knowing that there will be a flow of losses from decisions they had nothing to do with. >> a lot of your comments sound a lot like a.i.g.. i would like to put it on defense of their bonuses. in their statement, and they said that they had asked their employees to receive retention payments or bonuses or stocks or any type of pay of $100,000 or more to return at least half of those payments. i would like to put the a.i.g. statement in the record. would you at least do as much as they did that would you ask executives to return half of their retention payments? >> i will not.
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i believe that would be a breach of faith with the agreement i have struck with the employees of these companies. trying to take such action would be detrimental to the taxpayer interests. i know how it difficult this is. i know how frustrating it is. i believe to take such actions would not help the american taxpayer. >> earlier you spoke rather movingly about public service, about people who take a job to give back to the community and help their country. fannie mae and freddie mac are no longer answering to shareholders. and they are answering to taxpayers. they are not on answering to taxpayers for their salary and bonuses which i believe they do not deserve, but they're entering -- answering for continued bailouts. you are in a very different
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structure now. i would say you should look for employees who want to give back to their country with their talents. yesterday we had a bill passed out that will treat a.i.g. like every other government agency. and on the pay scale of every other government agencies and will not include bonuses. congress is acting to live in a way that is more appropriate for an agency that continues to be bailed out. they're no longer entering to shareholders but to the american tax payer. the american tax payers are without jobs and struggling. it is hard for them to understand how executives get $6 million in pay for a failing entity.
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there are talented people that can handle these jobs and do it in a way with a pay scale appropriate with government agencies. i yield back. i have more to say that my time has expired. >> i just want to take a moment. we are approaching the noon hour. we have a few more members. i want to take a personal privilege and say thank you for serving as a human shield this morning. i know it has been tough. we thank you. the subcommittee chairman is recognized for five minutes. >> why did the enterprise enter a conservatorship? >> we entered in september 2008 because of the severe economic stress our company was under.
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it felt a time out was necessary. >> mr. demarco said it was a series of poor business decisions that led to it. do you agree or disagree? >> i tried very hard -- >> i am asking about decisions that led to the entering of a conservatorship. it is very simple. what were the decisions that led to that. the answer is obviously yes. the answer has to be yes. or else there would not have been a conservatorship. >> it is difficult for me to say. i do not want to second-guess my predecessors. >> we're paying you a handsome salary because you're supposed to be an expert. >> is very difficult to say what
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one would have done at that point in time given those circumstances and pressures they were under. >> you cannot think of a single poor business decision that was made prior to 2008? >> i can talk about some decisions that were made that i hope i would do differently. i would prefer not to characterize them as poor. >> poor business decisions is your language. what did you mean? he is obviously reluctant to go into that. hopefully, you will not be as reluctant. >> both fannie mae and freddie mac reduced their underwriting standards and allow much greater risk in terms of the mortgages they purchase. they reduce the guarantees. they made investments that while they were all related by
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private credit rating agencies clearly we have seen that there was substantial risk in those instruments. these are business decisions by the executives. this is largely occurring from 2005-first half of 2008. >> what was his total compensation? >> i do not know. >> would you disagree if it were $12 million? >> that may be right. he was the ceo. >> it ended in 2003-2008. what was his compensation? >> i do not know. >> it was more than $30 million. >> i could believe that. >> you can understand the frustration of taxpayers who
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were paying bonuses while the bus is driven through the gates of. then you want to pay businesses while they change the tires. >> i can understand the frustration. this committee does not know me well. i have been a civil servant my entire life. most of that has been in policy decisions in which i've tried to advise policymakers including numerous congresses of the rest to the taxpayer and the model. he gives me no satisfaction to be sitting here seeing the devastation of the american taxpayer. i spent the better part of my career trying to warm policymakers of the risks that were inherent and the structure in place. this is why i like to end this hearing with the same plea that i began with. i would like for fhfa to work with the congress administration to bring these concern readerships -- conservatorships
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to an end. james johnson was the ceo back in the 1990's. >> what was his total compensation? >> substantial. >> he had a good working relationship with congress. >> he did. >> franklin? >> i do not know. >> would you disagree if it were more than $90 million? and he had a good relationship. this thing we need a good working relationship, one could argue that is what got is into this. >> i do not recall saying that. likes the graveyard is faulkner -- >> the graveyard is full. we have to raise compensation
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levels for judges so we can attract the right kind. every time there is an opening, there are 100 folks that are dying. they will take a tremendous cut. i find it ironic that the total compensation for the united states supreme court justices is less than either than these two men made. thank you. >> thank you. thank you to our witnesses for being here today. i know you would like to be here. you make the argument that putting aside histrionics, the
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challenge you face is a substantial number of the mortgages are tied up in these two organizations. you have competent managers willing to manage that freddie mac and fannie mae and you have to give a nod toward what of the marketplace offers in terms of skill and leadership and thus the compensation we are looking at. >> that is correct. >> would you agree that given the fact that the taxpayer has invested very heavily directly in trying to straighten this that transparency roles might be a little different for these two organizations and for -- and for a private organization. >> i think there can be an allowance for greater
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transparency. >> as a public servant, what -- where is that line? >> is different than a purely private entity. >> what do we have a right to expect? >> these companies are continuing to operate as private companies and are entitled to have the same disclosures of compensation. we have detailed compensation structures. that.beyond we provide numerous reports on the conservatorship operation.
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there are the losses that have led to these in the details the activities that are under way. >> you are familiar with the inspector general report. it is actually critical with the compensation system. fhfa has not developed procedures for the compensation level. each year nor require them to justify the means by which they calculate their recommended calculation levels. do you disagree? >> i am familiar. i can explain it. we have agreed to take their recommended remediation. >> you are going to have written procedures? >> we will have written procedures. when might we see them? >> we will have them in place by
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the end of the year. why wouldn't we had a little bit less confidence that the compensation program bonuses given the lack of transparency. why should we have faith that that is the ticket? >> it is a fair question. they have disclosed the score cards. what they're referring to is the internal review process. they would not have written procedures. he said we did not have one process documented. he is quite right.
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they are saying you have delegated them to undertake normal day-to-day operations. a lot to send an examiner in there to recheck the calculations that have been done to determine be paid. we have agreed to do that. >> one final question. this committee requested copies of compensation agreements from your office. we have recently received heavily redacted copy is. --- copies. is it your goal to not see the actual agreements? >> this has to do with those
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that earnings and those of are not. we have provided the committee with a great deal of information detailing the individual executives of the companies. >> the majority feels that you have been generally forthcoming. would you be willing to provide all compensation packages that include bonuses with the names redacted, however with numbers that could be referenced on we're going through the skill sets? we do not need to know the name of every individual. we would appreciate if we could go to compensation levels far below the normal 10,000 level. >> we will provide that. >> thank you.
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>> you're very welcome. we recognize the young lady from new york for five minutes. >> thank you. thank you for mr. demarco being here. i have a few questions to follow up some of the testimony that i have heard this morning. you mentioned in your testimony this morning, you talked about the need to attract quality employees. that was the justification for these incredible salaries and bonuses. then you talked about in many entasis salaries -- in many instances salaries, maybe they have an interest in it are interested in the greater good. which is it? which one should be the motivation for the salaries?
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>> the motivations are personal. what i am looking at in terms of running two companies is i have to be concerned about their concerns about their compensation. what makes this not such a clean up this or that is that to work at fannie mae or freddie mac today the employees, whether they are an executive or secretary, they run the risk of not knowing how long the company is going to be around. i think that that is a very few tricky thing for us in this tricky for the ceo's to stay engaged. >> i would agree with that except for fannie mae and freddie mac have the ability -- we're not talking about third quarter losses going back to the treasury. did they have made huge request for additional money. anyway, my thought is maybe we need to reconsider if it is
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performance and if the third quarter losses should be of concern to anyone including the american taxpayer. >> i agree with that. i would say, and this is in my written statement, we're looking again at the corporate scorecards. we're looking at the condition of the company as well as the shrinkage taking place at the company. they're trying to reduce compensation. we are making serious efforts to be billing at a lower compensation. >> speaking of the corporate scorecard, you mentioned the uss performance. what do you base the scorecard on? >> hamp is reflective of loan modifications which is a critical loss of mitigation activities taking place and fannie mae and freddie mac. it is not just helping
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homeowners that are having trouble but also reducing losses for the taxpayer. important. >> i am sure you are aware of issues with the hemp program. maybe that is not what we should be basing the standard on. >> yes. i am aware that there is a lot of concern and criticism. it is certainly not what the administration projected initially it would be. fannie mae and freddie mac have not just undertaken the modifications. they're going much further. we have been collectively working on an array of loan modifications that go well beyond hamp. they have done a hundred thousand loan modifications. fannie mae and freddie mac have done over 1 million loan modifications. did the performance has been
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quite good. it has led to a reduction and tax pare losses. we're trying to go beyond the limits to offer them a good opportunity respective of the taxpayer. >> i would request that you provide a standard compilation. if you could submit that, i would appreciate it. >> certainly. >> in my few seconds after left, many would argue that the housing market is the primary reason that there's such a financial crisis in 2008. in response of that, the knee- jerk reaction was to d passodd/frank -- was to pass dodd/frank. yet they are not included are covered by it. probably when the biggest reasons that this whole crisis occurred.
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can anyone on the panel explain that to me? why were they left out of that bill? >> i cannot explain it. i can say it is a point of some argument during the development and debate regarding dodd/frank and the leadership that was pushing the legislation through. the housing market was too unstable. did the wanted -- they wanted a different vehicle. i am just saying that there were certainly plenty in congress that wanted them to be part of the legislation. that is not have the legislative process worked out. >> thank you. i yield back. >> i now recognize the gentle lady from the dish of columbia. >> thank you. i appreciate this hearing. mr. demarco, my own profession
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before i came to congress already had a bad name. i was a lawyer. i think that fannie mae and freddie mac have given home ownership a bad name. that is why i am interested in oversight of your own lawyers. i was struck by the law firm, apparently a major law firm, you used. in new york district court judge -- and this is really unusual for a judge -- it may even be a cause for someone to go before the ethics committee -- if talked about finding faults contained in five paragraphs that the brown firm had submitted.
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this was a foreclosure case. the case was that a loan [unintelligible] the judge went on to say that the misrepresentation, and here i am quoting him said that it was "out rages and the firm has impeded the proper administration of justice." he said this was not the first time that the firm had been on ethical -- unethical. how could a law firm operate on behalf of fannie mae and freddie mac after being sanctioned like that? >> forgive me. i am not familiar with the particular case your siding. i can report that they have both ceased doing business with that particular law firm. the issue came to our collective
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attention. >> why was this law firm kept on after being sanctioned? was this firm considered considt the outstanding firm for fannie and freddie -- you had to have it services? >> i cannot speak to the timing. i do not know when this information came to our attention. >> are you following the firm's -- the conduct of the firms that you have? >> fhfa recently directed fannie mae and freddie mac to begin the wind down of the retained attorney networks, the law firms around the country that are used to process foreclosures.
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this approach to doing business this way and a direct engagement between fannie mae and freddie mac and law firms is on a path to seize. we are stopping it entirely. >> that is good news. we understand that you have said that firms would now have to meet, i am quoting, what are those criteria? >> those are being developed. >> could i ask that you submit a draft of those criteria when they are completed? when will they be completed? >> i know they are actively going on. i cannot tell you exactly. i think over the next couple of months we are looking to have this wrapped up. we are working not to test with any and freddie, -- not just with fannie and freddie, the banking agencies have been
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involved in oversight with the banks as mortgage servicers have been doing in this area. the law firm works as a mortgage servicer. we are trying to get alignment with the standards we believe our profit, that the bank regulators are lined with us on that so there is uniformity in the mortgage market with regards to the performance expectations and standards which we are going to hold law firms accountable to. this work is underway. what we are hoping for is that we can come to one set of standards in which there is going to be better accountability for law firms that are doing foreclosure processing. >> the last thing they need is law firms to drive them into for the trouble when the american people already find and hold them accountable. >> will the gentleman yield?
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i want to understand. you pay over $1,000 an hour. they are working to try to figure out how to manage law firms. that is why we had to pay? we had to pay nearly $3 million ? so they would begin working on standards to do better? >> they have standards. they have standards in the contract. they were not identical. with the foreclosure abuses that have been identified -- few firms have done a lot to punish the entire industry. we are taking the appropriate action to remedy that. this is a matter of simplifying of fannie mae and freddie mac and scaling back. it was my judgment that the corporate step was to not have them continue to maintain -- the
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appropriate step was to not have them continue to maintain these relationships with individual law firms but that it would be better to do it all through the mortgage servicer. >> a thank you for yielding. i share the concern that they may have reached a better conclusion. it was interesting that it was government officials who interceded. i think the lady for bringing this up. -- i thank the lady for bringing this up. >> the draft is important. >> we look forward to seeing it. we now recognize the chairman of the subcommittee, the gentleman from north carolina. >> thank you. mr. demarco, has fhfa ever rejected a compensation package?
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>> yes. we have had proposals made that we said that is not acceptable, let me do it. >> would you be willing to submit that -- let's redo it. >> would you be willing to submit that? >> i will try to find some inappropriate to submit. these are done as proposals that are made -- find something appropriate to submit. these are done as proposals that are made to the board. >> i understand. i would ask you, has the white house ever been in contact with you about the compensation issues? >> under the stock purchase agreement that provides the treasury's support to fannie and freddie, part of that is written in that the fhfa shall consult with the treasury department.
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this is done as a consultation. every package is sent to the treasury department for their review. we request a consultation with the treasury on this. this is most active in 2009 when we were working with ken feinberg. >> has the white house ever reached out to you? >> i have not had any conversation with the white house regarding executive compensation. >> mr. haldeman, has the white house contacted you? >> they have not contacted me in any way. >> has the treasury? >> nook. . >> mr. williams, has the white house ever contacted you? >> no, they have not. >> has the treasury?
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>> no, they have not. >> this is interesting because there has been a cry from the president about executive compensation. it is somewhat strange to me that in an area where he could exert influence he has chosen not to. additionally, mr. williams, mr. haldeman, it has been mentioned in the press that part of your bonus compensation is tied to your relationship with the hamp program, mortgage modification. it has been reported that 35% of your compensation is tied to what you connect and it modified through the hamp program.
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is that correct? >> we look at an array of poles under our total loss mitigation efforts. we do not only look at modifications, but our own modifications and activities around our reo, including activities to open up mortgage help centers and provide counseling to neighbors. hamp is one of many metrics that fits into the overall. >> is that an individual metric? is mortgage modifications one of the metrics and hamp is within that? >> it is one goal within a series of metrics we are looking at. >> what percentage of your bonus structure is tied to that? >> the board looks at the totality --
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>> i understand the board laid out these metrics for how you would be compensated. beyond your normal day to day compensation, you hit these metrics, they would reward you financially. you are aware of what that contractual -- what those goals are. what percentage of your bonus compensation deals with mortgage modifications? mythe board of value it's performance based on the totality of the scorecard -- the board evaluates my performance based on that fatality of the scorecard. they look at the totality of the scorecard. >> i asked for an additional minute. you are not asking mike >> -- answer my question. what percentage of your compensation -- you are not answering my question. what percentage of your
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compensation is tied to it? >> mike compensation is tied to our performance against all the goals and objectives. i am of the limited based on how the company does against each of those metrics -- i am based on how the company does against each of those metrics. >> it is more of a feeling. in your 2009 10k, goal of the one it is your performance in helping the housing -- dold number one is your performance in helping the housing authority. goal number 3 was to measure, manage, but use -- and reduce risk. an interesting order.
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there is no waiting -- wighting to this? if you had zero mortgage modifications but you saved taxpayers $80, you could get the same bonus that you currently get? -- save taxpayers a few dollars, you could get the same bonus that you currently get? >> the chair would like to tell the gentleman we are going to have a second round. >> this is very important. i ask consent to submit the article. >> with the objection. -- without objection. we will now start a second round. oh, i am sorry. i am getting new glasses, a promise. -- i ptomise. -- promise.
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it is the intent of the chair to conclude the round by 1:00. i will not keep the past 1:00. we now recognize the lady from california, way down there. >> thank you, mr. chairman. thank you, witnesses. we have been talking about accountability. it is my understanding that mr. demarco make determinations on salaries based on performance. would you agree with that? >> yes. >> let me ask you, mr. williams, in a senate hearing yesterday, it was disclosed that fannie failed to contact nearly 60% of all borrowers for loan modification. how would use for -- how would you rate your performance? >> i am not a service --
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familiar with the fact. we managed our servicers. our services are held responsible. we have taken -- undertaken a number of efforts. we have increased our incentives. >> 60% is not accountable. what i am asking you to do is go back and determine whether it is accurate to say that 60% of your borrowers have not been contacted for loan modification. mr. haldeman, it was disclosed that 80% of your borrowers were not contacted. are you familiar with that? >> what period of time was that statistic? >> i do not think it matters.
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i think the fact that 80% of the borrowers have not been notified is an f. >> the reason for the question is to see how far in the past that was and whether we are making progress. >> i think it was within this year. >> i am not personally familiar with what was reported in the senate yesterday. i would find these numbers hard to believe. >> would be provided disinformation to the committee so we can assess your performance -- would you provide this information to the committee so we can assess your performance? >> absolutely. >> mr. demarco, you have been at a number of meetings that had been scheduled. i thought we made great progress
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at the last meeting. we know that the hamp program has only reached 8000 homeowners. you provided us with information that would suggest about 3 million of those homeowners fall under fannie or freddie. based on the proposal that the -- president suggested, if these have been homeowners that have been paying their mortgages on time, that they could refinance their loans from whatever the percentage is now to as low as 4%. that all looked very good. we have not heard a peep from nuisance. i would like to know what is happening? >> fannie mae and freddie mac do not have 3 million underwritten mortgages.
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you are quite right. we have had discussions discussing the program and its opportunity to assist borrowers to be able to refinance. when i made the announcement regarding the changes to the program, i said we would have the directives out to the servicers, the people who service mortgages, we would have the guidance regarding it out to them by november 15. that was to it. that went up yesterday afternoon. -- that was yesterday. that went out yesterday afternoon. they have the updated guidance, what the changes are, what that means operationally. as of today, they have that information. they should be implementing the changes. >> i can say that you can go into any bank, any of the big five, and ask them to refinance
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your loan and if one will not do it another one will? >> we are trying to encourage services to reach out to borrowers to let them know this opportunity is available. institutions are going to need a different amount of time to make the changes. they have known it was coming. the big ones have been geared up for it and are looking forward to participating. they might all be ready at slightly different time periods. in the near future, all of them will be up and running with it. >> i yield back. >> i recognize myself for a second round. i brought up the suspect of general counsel. mr. demarco -- i will do it this way, mr. williams, what would your legal fees in 2010? >> i would have to check on
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that. >> what we're outside legal fees? >> i will have to get back to you. >> do you know how much they are spending? >> not of the top of my head. >> is it fair to say -- not off the top of my head. >> is it fair to say that these lawsuits were because you needed somebody to manage these various lawsuits? are these being done by his observation are -- or are they being done by outside counsel? do you need to spend the $2.90 million to get somebody to hire outside counsel? >> it is a team effort. he is no longer employed by freddie mac. >> the general counsel over at
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fannie mae two $0.60 million. it is not a whole lot -- dew point $6 million. it is not a -- $2.6 million. it is not a whole lot. if i go to major fortune 500 corporations who have huge patent portfolios and they are suing constantly and they are paying half as much, very seldom are they going to get to 2.6. i see a direct relation. what i heard earlier was you guys got swamped in how to administer the job. this was so unique. $2.9 million is a good chunk of money. isn't it better to get attorneys
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who make less who know about these suits. when one attorney went from a u.s. attorney to a congressman he got a small pay raise. your salary seems to be sufficient. >> we are putting that to the test on a daily basis. >> i would like to move to another one. although the executive compensation is a subject here, this is involved. yesterday, i read that uncle sam is a reluctant landlord of foreclosed homes, millions of homes are currently for sale or rent. mr. williams, have you done everything you can do to quickly sell and get back in the hands of people -- or to rent to
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people who can afford to pay the event of the home, even if they are the existing better -- debtor? >> we have an expensive operation that we run. we are constantly looking to move properties. refers to rehabilitate the property. we look to preserve the community -- we first rehabilitate the property. we look to preserve the community. we focus on people who want to come in and own the home. that is the best thing you can do for the neighborhood. >> by the time you do the liquidation sale it has been in foreclosure and unoccupied or even occupied by somebody the owners sublet two or somebody's got thing for a year or more -- sublet to or somebody squatting for a year or more?
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>> what we are dealing with is properties are staying in foreclosure for an extended period of time. >> have you come to congress for relief so you can foreclose more expeditiously or convert a homeowner into a tenant? >> we do have a tenant in place program of which we are renting back properties to 10,000 borrowers. >> out of millions. the question i asked you, maybe i will go to mr. haldeman, can congress give you greater authority so that these sort of expeditious conversions will cause less loss of assets to communities. we come from different communities.
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the one thing we know is the matter where a foreclosed property is the entire neighborhood supperffers. do you have all the tools? 10,000 rentals and to 1 million homes does not sound like it is working well. do you have all the tools you need so these homes are occupied and as productive as possible regardless of whether the current debtor is able to make payments? >> we have worked with fhfa on an initiative that i think is going to allow us to more effectively deal with the problem you are talking about. it will have increased pressure on our services. >> mr. williams. >> two other points. the foreclosure laws are state laws. if congress is willing to act to
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take responsibility for what our current the state laws that would be one thing. -- for what are currently state laws, that would be one thing. we are working on opportunities to further expand the program for rentals. >> mr. demarco. you do not get paid as much but you are welcome to give full answers. >> it has been a challenge to look at the difficulties that you talked about, properties that are occupied. part of the difficulty is these are governed by state laws. certain states have foreclosure processes and requirements that are designed to protect the borrower. it is imposing greater losses on the investor in these mortgages. it is a time-consuming and costly process to move the
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properties through foreclosure. in some states, it is an enormous length of time to move that property through foreclosure, to get that property back into the marketplace. i do believe that is a problem. it is not being addressed. >> i am going to be cognizant of the overuse of my time even on the second round. i will tell you, if you will bring to us the bad apples, the ones he believed the state's -- the ones you believe, the states that are hurting you, when it comes to federal preemption, we and the states a lot of money. if we are looking at the programs helping their citizens, we have the right to say this money will not be as available to, i will say, north carolina, this will not be available
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unless n.c. gives us the tools to get a reasonable opportunity to rehabilitate these. i would say, even my home state of california, given the choice of not getting the federal dollars are making changes as to underwritten homes, they would make changes necessary to help. we have never been asked. i would hope that he would look, you sure general counsels, -- that you would look, and use your general counsel. all of those states, all of those cities are within our portfolio to try to help them help you and help all of us. >> i will have the team follow up with the. i will say that california has one of the faster processes. that has helped certain market in california to recover better and faster. >> thank you.
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>> one clarification, the chairman asked for agreements with regard to conversation agreements, i want to make sure we are talking about those executives named in the sec filings. >> i believe that is what we are talking about. >> a lot -- you mentioned with regards to those law firms dealing with foreclosure, i think you said two firms had given the rest of them a bad name. >> i said a few. i did not say two, i said a few. >> what other than changing the
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lawyer network system, has anything been done to bring any kind of punishment to these guys? i used to represent outliers. -- lawyers. lawyers would be suspended if not disbarred. i find it interesting how they keep working for us. i do not understand it. i wonder whether we underestimate what they have been doing. this whole signing stuff, we created a "normal," that is not normal. that is not supposed to be
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normal. have there been any efforts to punish these folks? >> i am not an expert. my awareness is that this would be something done by a state bar association. what is puzzling to me is i am not aware of hardly any state disciplinary action that has been taken. there may be people behind me who know more. that is in their realm. we have been working with state attorney general's on this issu. they have been taking a close and a long look on foreclosure processing issues. >> did you have something on that? >> i was going to echo that point. we have been cooperating whenever we find these situations with the state attorney generals. >> did you have something?
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>> i have nothing to add. >> let me say this, i know that you probably felt uncomfortable being here. i have to tell you, i do not have any sympathy. the people i face every night when i go home in baltimore, in my block, of 30 houses, seven or eight are in foreclosure. those were my neighbors. we see it over and over again. i think there is more we can do. i really wonder, sometimes, whether the president even knows
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how significant this problem is. i say that with all due respect. i wonder whether he has the information available to understand how many americans are drowning. we just had -- 16,000 people came out trying to get their mortgages modified. 16,000 in four days. i just hope that when you go back to your drawing boards, i wish i could hang out in the boardroom and whisper in your ears constantly, reminding you the people who are suffering in need urgency -- and the urgency and do not feel like they are getting it.
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-- and need urgency and do not feel like they are getting it. the man i talked to yesterday. he comes home. all his stuff is on the corner. it is christmas time, thanksgiving. he does not know where he is going to go. listening to people who make millions of dollars who are supposed to have something to do with his plight, it does not give him much relief. he cannot afford a house. he cannot even afford a turkey. i hope you will keep that human element in mind. we look forward to -- we will be meeting with you again, not the committee, but our group of legislators, within the next two to three weeks. thank you.
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>> i recognize myself. i ended with you. how your deferred compensation is coupled with it. -- is calculated. reading the article on this, it is not clear if it is fanny or freddie with his compensation package works this way. -- fannie or freddie where his compensation package works this way. >> we have a scorecard that has broad categories such as financial results, mission, technology and infrastructure, there are weightings attached to those. there are four or five of them. the categories are typically 20% to 30%.
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hamp would be a setpoint under one of those larger categories. there are not weightings attached to a subpoint. >> is one of the broader sections mortgage modification? >> it would be mission were supporting the housing market, that kind of language. the points under that would be all the tools we have to try to be supportive of the housing market, including modification. >> what other than modification would be in that category? >> refinancing, harp and traditional, additional modifications and hamp modifications. those could all the points.
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>> the piece is largely modifications? >> that would be a big piece of it. it would be a significant piece of it that our board would be looking at. it is not precisely weighted. i am sure our board looks closely at the number of modifications done. >> what percentage of your preferred competition comes from that? >> i do not recall the precise number. it does vary from year to year. it would typically be in number like 25%. >> you know that the board is going to measure you on the scorecard? >> yes. >> is that similar for your organization? >> yes, it is. >> is it in a similar form as described? its stores similar? >> -- is your scorecard similar?
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>> i have never seen the scorecard. we look at similar things. provided stability for the market, ensuring we do everything we can to manage losses -- also making sure that we continue to address and improve the operational areas of the country. >> our mortgage mutt -- modifications a part of that? >> yes, they are. >> is hamp a part of that? >> hamp modifications and treasury administration is one piece. >> that is much more forthcoming. i appreciate that. you outline this in your written statement about the scorecard.
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back in march, the ig said the fhfa did not have a policy on how to handle that. it sounds like that critique, you have incorporated and there are some solid policies by which to judge these scorecards. >> i submitted to the ig that this would be completed by the end of the calendar year. >> thank you for clarifying. i do appreciate that. the additional question would be, would he make public that policy? -- would you make public that policy? >> i certainly could. yes, i will make it public. it is a written, internal procedure. >> willie make your scorecard
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public? >> -- will you make your scorecard public? >> i can see no reason -- what it has to be reported. these are publicly disclosed. >> a user-friendly format. we have three broad goals. here it is. it is very unclear in the pages. would he make this -- >> i will work to make sure we have greater currency -- transparency. >> since we do have the heads of the two institutions here, i mentioned to you as a human shield. my intention is not for you to throw yourself in front of this questioning. i appreciate your willingness to
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do this. it is more of a soldier-like sacrifice. i appreciate it. we want to be able to understand how you will be judged and what success looks like. >> it is a reasonable request. i am happy to do it subject to the approval of our regulator. we are a regulated institution. i would like to check with the regulator. >> nicely done. mr. williams? >> would disclose our goals in accordance with the -- we disclose our goals and it wouldn't with the -- in accordance with the sec rules. >> we would like to see housing finance reform. i have been in congress since 2005 trying to articulate that.
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it has still not happened. the administration has not taken the lead. the president has not taken the lead. the president has complained but two large entities, where he could have a larger and direct say, he makes speeches instead of consultation. there are discussions about fannie and freddie's losses. at what point will your institution be able to repay the taxpayers? >> i do not venture a time frame in which we would do that. we are focused on our credit losses as you have seen from the report. the activities we have undertaken are producing expectations. we will continue to focus on this. much of what we are dealing with is driven by the state of the economy, unemployment, and
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declining home prices. >> mr. haldeman? >> we do pay 10% dividend on our outstanding draw. our annual preferred dividend is $7 billion. i think the best place to go to get an answer to your question is detail analysis put out by fhfa which looks at both enterprises going forward and under different scenarios makes a projection as to the amount of fraud required going forward. >> you do do -- the amount of draw going forward. >> you do not have any numbers? >> we do. they were submitted to fhfa. >> you are not willing to say what year it is? >> i cannot recall from the document. >> what you will fannie have
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repayed the treasury? >> we will never fully be able to pay back it up. -- the amount that is due. that is why the director has highlighted the need to move forward. be able year will they wou to repay the taxpayer? >> i do not believe they will ever repay the taxpayer in full. >> ever? >> no. i would hope the conservative chips -- work ends before then. >> i do not believe either company will repay the support in full. i have said that before.
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i look at the current financial of the company. the fact we are shrinking the portfolio of the company. looking at the expenses that are there, including the dividend which is paid to the treasury department. i do not have a timeline of looking forward that i can point to and say, by this year, this will be repaid. i hope we move on in the near future. we will not get them paid before then. >> if we left this as it is structured, we could be back here having the same hearing in five years? >> we will look different in five years. the bulk of business we have been taking on its profitable for the taxpayer. i believe as we finish working through these bad mortgages, we
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will move past that and the remaining bulk of business will be profitable. i believe that is one of our fundamental obligations, to ensure the new business is profitable. it is not going to be profitable enough to be repaint this amount of money in the near future. >> what year did you think that will be? >> it will depend on a lot of different things. we believe by the end of next year. >> i appreciate it. i appreciate your willingness to enter questions. -- answer questions. you have been very forthright. we understand the difficult situation that has been thrust upon you. we do appreciate your service to the federal government.
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we appreciate your willingness to head up challenging institutions. we do. the concern is the extraordinary taxpayer support and that we have two nationalized entities. we have two nationalized and dis here -- entities here. that is when it becomes a question put the taxpayers. if you are private, we have had these hearings before. that is not the purview. however, because of the nature of your entity, that is where this concern comes. we understand you are patriotic. we are not questioning your patriotism. we are questioning whether or not this is an appropriate type of level of compensation with
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two nationalized and these. thank you for being here today. i appreciate your willingness and time. this committee stands adjourned. [indistinct conversation] [no audio]
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>> tomorrow, north dakota senator john hoeven join us to talk about the deadline for the deficit reduction committee. then a senator sanders will discuss in public programs. then a discussion of executive orders issued by the president. david abshire for the center of the study of the presidency a look at how executive orders have changed to read history. each morning at 7:00 -- have changed throughout history. each morning at 7:00 eastern. then the energy secretary will
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testify about the government decision to guarantee loans to the solar company solyndra that just filed for bankruptcy. the hearing gets underway at 10:00 a.m. eastern. a bipartisan coalition of lawmakers urged the deficit reduction committee to come up with a strong debt reduction package. earlier, the house approved legislation to make it easier for people from one state to take the weapon to another. 272-154, the vote did have democratic support. the senate is unlikely to take up that measure. the chair: the gentleman is recognized. mr. smith: h.r. 822, the
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national right-to-carry reciprocity act of 2011, was introduced by mr. stearns of florida and mr. shuler of north carolina and is co-sponsored by 235 members of congress on both sides of the aisle. this landmark legislation recognizes the importance of the second amendment and makes it easier for individuals with concealed-carry permits to travel to other states. 49 states now allow concealed-carry permits and 40 of these states extend some degree of reciprocity to permit holders from other states. this apply the states' reciprocal agreements nationwide. this allows people to conceal firearms to recognize other states' valid concealed permits much like other states recognize drivers' licenses issued by other states. it determines eligibility requirements for their own residents. state, local and federal laws
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and regulations regarding how, when and where a concealed firearm can be carried that apply to a resident will apply equally to a nonresident. for example, many states bar individuals from carrying firearms in a bar, at a sporting event or in a state park. under this legislation, all of these restrictions will apply to nonresidents as well. h.r. 822 also addresses concerns regarding the ability of law enforcement agencies to confirm the validity of an out-of-state concealed-carry permit. the bill requires a person to show both a valid governmental issued identification document such as a license or passport and a valid concealed-carry license or permit. state law enforcement agencies can verify the validity of an out-of-state concealed permits through the system. it is available to law enforcement officials in all 50 states, 24 hours a day, seven days a week.
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data from the f.b.i.'s annual uniform crime report shows that right-to-carry states or those who widely allow concealed carry have 22% lower crime rates, 30% lower murder rates, 30% lower robbery rates and 12% lower aggravated assault rates as compared to the rest of the country. opponents of this bill have noted that some states would be required to recognize cleary permits from different states with different eligibility. however, 40 states already grant reciprocity from other states including states with different eligibility requirements. the states would not do this if different eligibility requirements were a concern. the second amendment is a fundamental right to bear arms that should not be constrained by state boundary lines. opposition to this legislation comes from those who believe that cleary permit holders often commit violent crimes
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which is demonstrably false or those who want to restrict the light of law-abiding citizens the right to bear arms. this legislation enhances the public safety and protects the right to bear arms under the second amendment. so i urge my colleagues to support h.r. 822 and, madam chair woman, i reserve the balance of my time. the chair: the gentleman reserves the balance of his time. the gentleman from michigan. mr. conyers: madam speaker, i yield myself as much time as i may consume. the chair: the gentleman's recognized. mr. conyers: members of the house, the measure that we have under consideration today is a very curious one in that there is some misunderstanding of what
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the constitutional right to carry loaded, hidden guns in public is really all about. and i would begin our discussion to point out that under the proposal before us, a concealed firearm permit issued by any state would be valid in every state that allows a concealed carry provision. and so, for example, a visitor to my home state of michigan would be allowed to carry a loaded, hidden weapon in public even if he has not met the minimum requirements to do so
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mandated by our state law. different states have enacted different requirements for carrying concealed weapons within their borders. and although federal law prohibits individuals with federal convictions from possessing a weapon, 38 of our states have chosen to deny concealed carry licenses to individuals with convictions for certain misdemeanor offenses. and so i would like to start our discussion off with the fact that there are so many members of law enforcement, so many
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members of the government, so many members of our editorials, please consider with me, my colleagues in the house, that every major law enforcement organization in the united states of america opposes the measure that is on the floor today, h.r. 822. every single organization, the international association of chiefs of police, the major cities chiefs association which
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includes the 56 largest cities in the united states of america, the police foundation, the national la tinow peace officers association, the national organization of black law enforcement executives. we have letters from 600 mayors of the cities in the united states. the national network to end domestic violence have sent us letters, the editorials in "the new york times", "the washington post," the "st. petersburg times" have all submitted
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letters and so i conclusion my opening remarks by observing that there is no constitutional right to carry loaded, hidden guns in public. and one of the things i hope we will be able to persuade you on is that the supreme court case of 2008 entitled district of columbia vs. heller is the case that the majority of the court ruled and justice scalia wrote this decision, that while the second amendment protects the right of law-abiding citizens to use arms in defense of their
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oklahoma -- defense of their home, but that it bans on carrying in public were presumpively lawful. it wept on to say -- it went on to say that the question held that prohibitions on carrying concealed weapons were lawful under the second amendment, that the prohibitions were lawful and justice scalia's majority decision in that landmark case rendered three years ago stated the second amendment is not unlimited and not a right to keep and carry any weapon
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whatsoever in any manner whatsoever or for whatever purpose. i cite the supreme court decision 1282783 of 2008, the district of columbia vs. heller. and i reserve the balance of my time. the chair: the gentleman from michigan reserves the balance of his time. the gentleman from texas. mr. smith: madam chairwoman, i yield one minute to the gentleman from ohio, mr. chabet, who is a senior member of the judiciary committee. mr. chabot: i thank the chairman for yielding. mr. speaker, the second amendment to the united states constitution states, and i quote, the right of the people to keep and bear arms shall not be infringed, unquote. in this modern age, when it's very common for people to travel to work or for pleasure, it's really become routine.

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